CEO interview: Taking mCube into platforms and data
The company, which was founded in 2009, is now a growth company, Lee tells eeNews Europe. And it is a growth company that is eager to break out from success in the smartphone sector into the Internet of Moving Things (IoTM).
The company’s success has come from its accelerometers and inertial MEMS sensors in entry- and mid-level smartphones. Its technology is a method of integrating MEMS motion sensors above electronics circuitry and hermetically sealing it from above using standard CMOS wafer processing. Through-silicon via (TSV) connections minimize the use of area-hungry bond wires and it has been used to produce the industry’s smallest accelerometers, including devices just 1.1mm by 1.3mm, the size of a grain of sand.
A series C funding round of $37 million funding in June 2014 came from such investors as Kleiner Perkins Caufield & Byers, MediaTek, SK Telecom (China) Ventures and Korea Investment Partners.
Back in 2014 mCube had shipped a respectable 60 million units partly by working with investor MediaTek (see CEO interview: China, not Apple, is way to go, says mCube CEO). As of May 2017, mCube had shipped 300 million units, Lee said. “And in the third quarter of 2017 we shipped 37 million and its climbing quarter on quarter.”
Lee estimates that break-even point for the company will come in the second half of 2018. However, 90 percent of mCube’s sales are still in smartphones. “We have to expand our IoT business,” said Lee. “We are beyond VC now. We are growth player now. We don’t need money for working capital but if we want to make acquisitions we will raise money,” he added.
Which is what mCube did so that it could acquire Xsens (Enschede, The Netherlands) from On Semiconductor for about $26 million recently (see mCube buys Xsens for system-level expertise).
Lee explains that the deal made sense for mCube on a number of levels. Xsens is a good business in its own right with a focus on sensor fusion software and installing that software into modules and subsystems. Not only does this take mCube up the food chain to higher value sales but it also takes mCube to more application-specific sales where customers are telling Xsens what specfications are important to them in areas as diverse as medical, industrial, smart cities and smart homes. “The Internet of Moving Things is not really about selling sensors, although sensor sales will result. It is about providing solutions, which might be hardware-and-software, software, or a service,” said Lee.
Next: Ticking the boxes
Lee said Xsens, with about 70 employees, is being set up as a wholly-owned subsidiary. Xsens has a very good brand recognition so they will continue under that name, Lee added. “They are given the freedom to design with mCube hardware or not,” he added.
Less sophisticated customers which is one of the reasons mCube is developing an inertial sensor with licensed microcontroller core on-board. He is determined to push home mCube’s integration advantage at the subsystem level with RF, sensor and MCU is a single component. Lee declined to go public on which core he has licensed although there is an increasing number of licensable options.
Lee acknowledges that the wearables and IoTM has not developed that quickly over the last three years. But nonetheless it is an environment where mCube has a CMOS integration advantage and, as yet, few competitors (see Nanusens creates nanosensors in CMOS).
“We have customers coming to us saying they HAVE to use us because of size,” said Lee. mCube’s 3D accelerometer the MC3672 measures just 1.1mm by 1.3mm and 0.74mm high.” This is highly beneficial for inclusion in flexible PCBs, smart watches, hearing aids.
But this does present a dilemma. “We have to continue to grow our smartphone penetration. You need volume to drive down cost.” Meanwhile the IoT market is highly fragmented with numerous low-volume opportunities and only a few high-volume ones.
Lee sees the way forward with a three or four box business model:
The first box is mCube the successful fabless semiconductor company. It sells in high volume with ASPs in 30 cents to $2 range. The third box is Xsens. Xsens sells hard-software subsystems that application specific and in much lower volume but with prices in the range $100 to thousands of dollars
The second box is mCube Modules where mCube fills the gap with platform sales, often for IoTM and wearables in the $2 to $20 range. “We don’t compete with our customers but in the IoTM space they may be less sophisticated customers than in smartphones. They are looking for a working platform that is easy to integrate.”
In the spirit of a news mCube modules approach to the market the company will take a wearable reference design to the Consumer Electronics Show in Las Vegas, January 2018. “We can provide that wearable as a bill of materials list plus software, or assembled PCB with software or as a boxed product with the customer’s logo on it.
Next: mCube’s fourth box
And what is the fourth box?
Lee reminds us that three years ago mCube created a subsidiary called Ten Degrees Inc. to focus on business related to indoor navigation. Although indoor dead reckoning by inertial sensors has a tarnished reputation due to accumulated errors, Ten Degrees is working on multiple methods to get around that. “Really Ten Degrees is about a data-driven business model,” said Lee arguing that in time it could be larger than the all other boxes in the mCube business model.
“Ten Degrees has a contract with Panasonic on an RF beacon-based system for calibration of the inertial system and correcting for drift. But really what Ten Degrees has is a calibrated dead reckoning system. The calibration can be provided by whatever.”
However, Lee admits that Ten Degrees is no longer wholly-owned by mCube. “Foxconn is minority shareholder. They are interested in it using it for their own tracking manufacturing logistics and personnel safety,” said Lee. But it is also clear that if Foxconn can make such an IoMT system work in its own factories, then it could be generalized as a major platform for industrial progress.
Clearly these are exciting times for mCube but future success will depend on leveraging is tiny size advantage markets other than smartphones. It depends on how quickly wearables, smart city, smart medical, smart industry take off. And as a private company with venture capitalists on board, on avoiding predation by others.
For now, Lee’s vision would appear to be build mCube into a substantial company that ticks multiple boxes for multiple customers.
Related links and articles:
News articles:
mCube raises $37 million for motion sensor push
CEO interview: China, not Apple, is way to go, says mCube CEO
Nanusens creates nanosensors in CMOS
mCube forms indoor navigation subsidiary
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