Swiss MEMS fab navigates new funding while it guides missiles

ZURICH, Switzerland, Nov. 22, 2002 — Intel Capital, along with others, has invested $10 million in MEMS manufacturer Colibrys SA in a second round of financing.

The 2-year-old firm employs some 120 people, reported revenue of $15 million in 2001 and is expected to report an increase this year. The new capital will fund expansion into the United States.

Sean Neylon, Colibrys’ chief executive officer, is not yet certain about the U.S. location, but said it would likely be on the West Coast, where most of its customers are located.

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Its fastest growing market at the moment, representing 30 percent of its revenues, is aerospace and military. These customers are ordering inertial navigation systems and accelerometers, which have to be robust enough to withstand the shock of a missile launch, but sensitive enough to do the job once the system is in flight.

“The munitions sector is showing strong demand at this point in time,” said Eric Gulliksen, manager of the embedded hardware group at Venture Development Corp., a market research firm. “It is one of the few ‘solid’ high tech business areas these days. It declined somewhat when the Cold War ended, but has picked up again recently with a munitions buildup in the U.S. and Europe following Sept. 11 and the ensuing Afghanistan military operations.” Gulliksen believes that the defense demand may create the kind of mass market Colibrys needs in order to thrive.

Inertial sensors can deliver information on speed, distance and direction back to military personnel or computer systems that respond with corrective information to reach targets more accurately. A guidance computer may even be built into a missile or bomb itself.

“For high-speed, ‘smart’ bombs, or tactical missiles, inertial navigation sensors may provide faster feedback than GPS or laser tracking,” Gulliksen said. He is referring to “limited tactical missiles,” which are small bombs with precision guidance and low yield with “only enough blasting power to take out a car, not a village.”

Colibrys cannot name the companies buying the military oriented sensors because of nondisclosure agreements. The company did say that the customers are among the top U.S. and European vendors in the sector.

After six months of negotiations, first-round investors Intel Capital, Banexi Venture Partners, TAT Capital Partners and Banque Cantonal Vaudoise were joined by Credit Suisse’s venture capital arm in Zurich.

Colibrys owns a new facility in Neuchatel, built specifically to fabricate MEMS in volume. It manufactures and designs MEMS for industrial, printing and scanning applications, which represent about 50 percent of its revenues, and optical MEMS devices typically found in scanners, fiber optic, and optical recognition systems, which account for about 10 percent of the company’s revenues.

“Production runs are still relatively small at the Swiss company, but like other new MEMS players coming into the market, it hopes the niches it targets will turn into large markets,” Gulliksen said.

A startup with a past

Colibrys was a division of CSEM, the Swiss Center for Electronics and Microtechnology, a nonprofit institute that balances basic and applied research, before the company was spun out in 2001. It’s a background that gives Colibrys the know-how to fabricate products for a range of applications. It is this breadth of experience that attracted Intel Capital, according to Michael Dierks, Intel’s director of strategic investment.

“Eventually, Intel could be a customer of Colibrys,” Dierks said. It already is indirectly, he said, because Intel uses equipment from ASML Holding NV, the Dutch lithography, track and thermal systems vendor. ASML uses micro-optical devices from Colibrys in its lithographic steppers.

Unlike other semiconductor vendors, such as STMicroelectronics or Analog Devices, Intel is not selling any MEMS products — yet. But Dierks said that Intel Capital has a MEMS strategy: fund R&D in-house and in academia. Plus it holds shares in Coventor, a leading design tool vendor for the MEMS industry. Vertical players in its portfolio are specialized in MEMS for optical, wireless and display applications.

Colibrys’ expertise fits with long-range visions of Intel executives, such as Radio Free Intel, said Dierks, referring to Intel’s ambitious R&D effort into the radio frequency (RF), software-defined radio and related wireless sectors. The vision sees all computer processors eventually integrated with high-speed wireless access — on a single chip.

Colibrys recently beat competitors in the United States, France and the Far East to win business from up and coming GalayOr Networks of Lod, Israel, because of its ability to handle complex designs.

Other MEMS foundries with a business model similar to Colibrys are Sensonor of Horten, Norway, and Applied MEMS of Stafford, Texas. But they are targeting different applications, according to Kees Eijkel, technical commercial director of MESAplus, a large MEMS research institute at the University of Twente.

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