UK Chip Maker Secures Funding While Global Growth of Industry Slows

Anadigm, a UK manufacturer of silicon chips has secured £10m second round funding from a consortium of investors.

The Crewe-based company is a spin-off from Motorola and makes the chips and software used to build analogue electronic circuits. The money raised will be used to develop further Anadigm’s field programmable analogue silicon and to establish a distribution network.

Mike Kay, Anadigm’s CEO, said the funding gives the company much needed working capital. “It will allow us to develop the business for international commercial operations, and to implement the next phases of our strategy.”

But while Motorola believes the global chip industry will see overall sales grow by between 10 and 15% this year, analysts and The Semiconductor Industry Association (SIA) are less optimistic.

The SIA recently said its already revised forecast for industry growth in 2001 is unlikely to be met. The group had revised its outlook down to around 17%, a 5% drop from what it had predicted earlier. One US analyst said growth will amount to no more than 1.2%, because the world’s economic conditions for this year will be much tougher than is widely thought.

Undeterred, Kay said demand will be maintained. “We have already built our core team and delivered commercial silicon to customers,” he said.

Stripped down, Anadigm’s FPAA is design software that allows engineers to select electronic building blocks from a library of designs and “drag and drop” these pre-defined elements into a microchip creating a digital production line. The designs can also be checked virtually before actual production begins, meaning chip manufacturers need not use costly silicon on test products, and can increase production levels.

According to investment house 3i, which injected £5m into the company, the demand for analogue design skills is fast outstripping supply. System designers are under increasing pressure to reduce time-to-market and engineering costs. Consequently Anadigm’s development of a Field Programmable Analogue Array (FPAA) will address this need in the market, said the group.

Both parties are perhaps relying on the premise that as more and more consumer devices with embedded microchips come to market, demand for low-cost, mass producing processing technology will continue.

This is not the first investment 3i has made in Anadigm, it fuelled the company with #3.2m early last year. Other companies in this round include Motorola, Quester Capital Management and NIF Ventures.

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