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And this time 25 companies have been brought on to the list (see EE Times Silicon 60: 2016’s Emerging Companies to Watch), slightly down on the 30 admitted in 2015. This brings the total number of emerging technology companies admitted to the list since v1.0 came out in April 2004 to 395.

Not all the startup companies EE Times has listed have been successful. If we were that good at tipping we would be considerably better than just about all venture capital companies. But we do not claim to be tipsters. What we do say is that we think these companies are worth looking at for a variety of reasons and that they may be interesting to watch because they are, in some way, bellwethers of a technology area or market application. They are interesting to watch without necessarily being companies guaranteed to find success.

While we described last year’s Silicon 60 as a tale of two Cs – California and China – a discernible trend in this year’s list is the resurgence of California – and to a lesser extent North America – as the spiritual home of the electronics and semiconductor startup. Whether this has something to do with being on the brink of another electronics revolution or series of killer applications to take over from the spent wave of the smartphone is hard to say. But as well as being a location that nurtures entrepreneurs in its universities, California is a destination many entrepreneurs aspire to relocate to, and that “gravitational” effect is in evidence in 2015 and 2016.

At the same time in this year’s Silicon 60 China has fallen back to be on to a par with other countries, such as France and Israel, in its ability to generate notable startups.

In this year’s list – v17.1 – North America provides 33 of the companies, an increase of two on the previous year. California alone is headquarters for 21 of the 60 startups. This is up from 18 companies in 2015 and 15 companies in 2014. At the same time China has dropped from providing eight companies in 2015 to just four in 2016, the same as it did in 2014.

Meanwhile in the last year Europe, has appeared to run the risk of becoming more marginal in the electronics and semiconductor industries. The sale of ARM, arguably Europe’s most significant technology company if not its largest, to Japan’s Softbank Group illustrates the point (see ARM agrees to be bought by Japan’s Softbank). Europe is also facing hurdles politically and in the general global economy with its Brexit turmoil.

But the continent still performs plenty of quality academic research. And it strives through institutes such as IMEC, CEA-Leti and Fraunhofer to push that out into the commercial world. Despite a significantly less well-endowed venture capital environment than the United States, Europe has increased its showing in the Silicon 60 and is now home to 17 companies if we include four Israeli companies in the count and 13 if we don’t. Last year the respective figures were 15 combined made up of 10 from Europe and five from Israel.

France continues to show well in the Silicon 60, partly a legacy of strong state support for startups and the efforts of CEA-Leti to push technology out in to startups (see Leti plans startup accelerator). France has five companies in the 2016 listing but has failed to produce a spectacular hardware-oriented business success for some years. SigFox SA (Toulouse, France), a 2009 startup that is rolling out wireless networks worldwide dedicated to the Internet of Things, could change that. SigFox networks have a strong presence in France, Spain and the UK and the company has recently turned to Taiwan and Singapore. The company has a partnership going with Samsung and is reported to be considering an initial public offering of shares in the company in 2016 or by mid-2017.

The significance of China’s diminished presence in this year’s list should not be overemphasized. This list is only a snapshot sampling of young electronics and semiconductor companies that does not provide real statistical significance. But it does serve as a prompt for discussion. For example is it notable that the last year has seen gathering momentum for China’s policy of gaining influence and market share in the electronics industry, not by funding startups but by the acquisition of overseas companies or stakes therein.

This has tended to involve plays for public companies such as the acquisition of CMOS image sensor developer OmniVision Technologies Inc. (Santa Clara, Calif.) by Hua Capital Management Ltd. (see OmniVision agrees to become Chinese) and by Uphill Investment’s acquisition of Integrated Silicon Solution Inc. (ISSI).

However many of China’s approaches have been rebuffed. In September 2015 disk drive maker Western Digital came up with a plan to sell 15 percent of its shares to China’s Unisplendour Corp. Ltd. but in February 2016 the Committee on Foreign Investment in the United States (CFIUS) notified Unisplendour and WDC that it would investigate the proposed deal. This encouraged Unisplendour to back out of the investment.

Similarly Tsinghua Unigroup let it be known it was considering a $23 billion bid to acquire Micron Technology (see China bids $23 billion for Micron) and that it was interested in MediaTek Inc. But made no move when negative comments were made in the US and Taiwan respectively.

Nonetheless it would appear that as many of China’s startup ASIC and SoC vendors such as Allwinner, Rockchip, have matured and left the Silicon 60 they have left behind a raft of analog, mixed-signal, sensor and FPGA companies but still essentially more comfortable in the Chinese market and not trying, or perhaps needing, to sell abroad.

We have spoken before of the difficulty for startups to achieve “escape velocity” and become global successes and this appears to be particularly true outside the US and California. To an extent the size of the local Chinese market means that is it is possible for Chinese suppliers to exist in a Chinese parallel universe (see China’s Parallel Universe) but that inability to break out may also have been what has been driving China’s attempt to buy position in the global electronics market.

Meanwhile any attempts by other regions in Asia to create startups seem similarly hindered by a lack of entrepreneurial culture, a lack of venture capital and/or the lack of large domestic market.

The one exception to that rule should be India. But even there, where software, EDA development, design verification services and entrepreneurship have a long history we have seen the emergence of relatively few hardware-oriented startups of global significance. Often senior executives succumb to the gravitational pull of California before starting anything in India. And unlike the case in China few of those executives have been pulled back to the mother country in the later part of their carriers.

And a government-backed plan to build two wafer fabs on the sub-continent now appears to have failed after six years of bureaucratic paper pushing. Earlier this year Indian cement and infrastructure company Jaiprakash Associates – which was the anchor partner in a consortium to build a wafer fab in Greater Noida in Uttar Pradesh with IBM and Tower Semiconductor Ltd. – pulled out of the project (see Lead partner pulls out of India fab plan). The second foundry project under the government plan named Hindustan Semiconductor Manufacturing Co. (HSMC), linked to STMicroelectronics and Silterra, Malaysia, at a proposed location in Prantij, near Gandhinagar, would also appear to have come to a stop.

That leaves Cricket Semiconductor Pvt. Ltd., a proto-foundry engaging with the state of Madhya Pradesh in India, and fabless chip company Ineda Systems Inc. as the sole two Indian representatives in the Silicon 60.

Cricket is a private enterprise trying to use a fine-grained modular approach to establishing its business. The next 12 months will be critical to Cricket’s plans to break ground for an analog and power semiconductor foundry wafer fab in India. Ineda meanwhile has found some success with backer strategic investor Samsung who has based its Artik 1 IoT module around an SoC from Ineda (see IoT Feels Samsung’s Artik Breeze).

US venture capital has been making some tentative steps back towards hardware and chip-based startups after having fallen out of love with semiconductors in the first half of this decade. But it is noticeable that the startups are also changing becoming increasingly aware that they need to capture more of the value created. This is favouring greater vertical integration and the invention of sub-system platforms that allow the creation of value through software along with the flexibility that software provides.

It is therefore noteworthy that Quanergy Inc. is the first “unicorn” to appear on the Silicon 60. Quanergy is using expertise in photonics structures to form a beam-steered multi-point lidar. However, the company, founded in 2012, has achieved a recent $90 million Series B of funding and its billion-dollar valuation by heading up the supply chain towards the system by developing sensors and software for capturing and processing real-time 3D mapping data. It is also focused on one application sector – automotive – where it hopes to improve the accuracy and reliability of on-board driver safety systems and enhance them with object recognition and scenario analysis capability (see Lidar startup becomes ‘unicorn’).

For some companies more rooted in physics and the fundamental part of electronics and semiconductor sector it may not always seem advisable to head up the supply chain but there are other ways to gain funding. One has been to engineer reverse take-overs of public companies looking to refocus. Two Silicon 60 companies, originally founded in 2013 and 2014, have done that. BrainChip Inc. (Aliso Viejo, Calif.) is developing spiking neural networking cores for licensing to semiconductor partners. It reversed into a mining and exploration company Aziana Ltd. that was listed on the Australian Stock Exchange and which has now changed its name to BrainChip Holdings Ltd. Similarly, Weebit Nano Ltd. (Tel Aviv, Israel), a company working in partnership with Rice University (Houston, Texas) on silicon oxide Resistive Random Access Memory (ReRAM) technology reversed into ASX-listed Radar Iron Ltd.

Such combinations of developments are symptomatic of one key part of the startup landscape, that the venture capital environment is strongest in the United States and particularly in California. And even if the ideas and research emanate from somewhere else in the world it is often beneficial for senior management, or even whole companies, to relocate there. And therefore in terms of geographical spread it should be no surprise that the Silicon 60 reflects the strength of the venture capital funding and the continuing financial pull of the US and California on the world’s best and brightest.

In terms of the ages of the companies in the Silicon 60 nothing much has changed with the average being still about four years, as it was last year. Some 26 of the companies on our list were founded in 2011 or earlier while 34 were founded in 2012 or later.

The Silicon 60 continues to be a broad church in terms of the technologies and capabilities represented as they include: silicon and compound semiconductor manufacturing, digital ICs and SoCs for consumer applications, FPGAs, hardware security, gallium nitride for power and for lighting, chip-scale photovoltaics for energy harvesting, photonic circuits, sub-threshold voltage operation of ICs, signal processing techniques, 5G communications, communications for automobiles and IoT, 60-GHz for short-range communications, wireless power transfer, techniques for gesture recognition and haptic feedback, image sensors, MEMS, environmental sensors, neural networks, vision and cognitive processing, resistive memory, quantum dot materials.

However, while the range of technologies may remain broad there is a clear sense in this list – and elsewhere – that the industry is collectively taking a deep breath as it prepares for yet another wave of change to overtake it. The smartphone wave and its major disruptive ripples have passed, but now there is a sense of expectation for a coming killer application.

Most people don’t quite know what it will look like exactly and those that do aren’t telling but if they can get the timing right will likely make a lot of money. It may be something to do with Internet of Things, with autonomous driving, or the advent of useful machine learning on hardware and that hardware may even be open source hardware.

In short, it may be that the future of our industry will be driven by one or more members of the Silicon 60, or another company yet to be admitted to its ranks.

Related links and articles:

EE Times Silicon 60: 2016’s Emerging Companies to Watch

ARM agrees to be bought by Japan’s Softbank

Leti plans startup accelerator

OmniVision agrees to become Chinese

China bids $23 billion for Micron

Lead partner pulls out of India fab plan

Lidar startup becomes ‘unicorn’

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