The number of startup companies that have appeared on the EE Times Silicon 60 list of emerging technology companies during its existence since 2004 has risen to more than 370. That includes the 30 startups brought on to the latest iteration – version 16.1.

Not all the startup companies that EE Times has listed have been successful but we only claim that we consider Silicon 60 companies to be worth following for a variety of reasons. That is; they are interesting to watch without necessarily being companies guaranteed to find success.

Some of the Silicon 60 alumni have gone on to an initial public offering of shares, some make livings as independent private companies; even more have gone on to be acquired sometimes for the benefit of investors, at other times to allow those investors to get out at a loss but at least with something – and inevitably some have failed.

And while 2014’s Silicon 60 v15.1 showed a small but discernible drift eastwards for the overall center of gravity of the startups, the latest list seems to express other economic realities of recent years. The two Cs of the title are California and China.

Given the contemporary concerns over China’s capability to continue as an engine of global growth – and consequent turbulence in the stock markets – that may change in years to come. But for now California’s Silicon Valley remains the leading cluster of semiconductor and electronics oriented startups and China has more than doubled its showing in v16.1 of the Silicon 60.

Thirty-one companies on the Silicon 60 v16.1 are headquartered in North America, one more than in v15.1 of the Silicon 60. And California has 18 companies on the list, an increase from 15 companies on v15.1.

We can add that 14 companies are headquartered in Asia and 15 in Europe if we include Israel in the European geographic region. If not, Europe’s tally is just 10, as five of our startups are located in Israel. But within that Asian count it is worth noting there are eight Chinese companies compared with just four in last year’s list.

Next: Getting more global

Whereas in previous versions of the Silicon 60 we saw Chinese ASIC and SoC companies striving to displace global counterparts, the latest crop of Chinese startups covers a much broader range of activity. It includes companies offering mixed-signal ICs and intellectual property, home networking modem ICs, FPGAs, image sensors and MEMS sensors. These are the signs of a greater depth and breadth in the hardware startup landscape in China, which is also one that continues to receive state support.

In recent years the model for that encouragement has started to shift away from direct state investment – often in university research groups – to a model that puts state money alongside private investment to bolster a western-style venture capital model. This is appearing to address past problems where at least some of those university research groups/companies were drawing down state funding without have a clear business model or any clear chance of success in the market. A more capitalist approach to entrepreneurship alongside state subsidy is the current refinement of the Chinese economic model as applied to technology development.

It is always difficult for companies to achieve "escape velocity" and become global successes, but having local examples of success helps build an ecosystem and improves the chances of others and those that come after. There are now signs that is happening in China. The examples of electronic equipment companies such as Huawei and Xiaomi are pulling Chinese component suppliers along and the increasing credibility of Chinese component suppliers is being reflected in interest from western counterparts.

An example is Intel Corp.’s move to take roughly a 20 percent stake in the semiconductor businesses of Tsinghua UniGroup. The Chinese government-affiliated private equity company controls the Chinese chip designers Spreadtrum Communications and RDA Microelectronics, an alumnus of the Silicon 60 list (see 4 Reasons for Intel’s $1.5 Billion Bet in China).

In an increasingly global market China is also looking to use its money to buy its way into the upper ranks of suppliers, rather than simply relying on nurturing its domestic startups (see Can China Buy Its Way Into The Global IC Industry?). One example of this is the bid by Hua Capital Management Ltd. to buy CMOS image sensor company OmniVision Technologies Inc. (Santa Clara, Calif.) for about $1.6 billion. OmniVision is the second or third largest maker of CMOS image sensors depending on which market research reports you read.

Next: Pendulum swinging back?

Can India and other emerging countries emulate China in the semiconductor and electronics sectors? Possibly, but it will take time.

Any success China is enjoying today has been at least 20 years in the making, arguably more. Similarly success in Silicon Valley can be seen to go back over 60 years to the time when William Shockley left Bell Labs in New Jersey and moved back west to set up a company in Mountain View and to be near his ailing mother in Palo Alto. The clustering effect in Silicon Valley and the government support in China inevitably makes for stiffer competition for entrepreneurs in other regions.

Cricket Semiconductor Pvt. Ltd. is a good example of an interesting company to follow. The company is engaging the with the state of Madhya Pradesh in India with plans to break ground for an analog and power semiconductor foundry wafer fab in 2016. The company is trying to go for a fine-grained modular approach to establish its business. We don’t know whether Cricket can raise the approximately $1 billion required to execute the plan in full, but it will be interesting to watch the company’s progress particularly as the Indian government appears to have strong ambitions in the semiconductor area without having yet built up any track record of success.

Investment turnaround?

We have discussed in the past how classical US venture capital firms had largely moved on from the semiconductor domain on the grounds that investment was too risky, too slow and exits offered poor returns. The VC preference moved to the sunnier climes of software and internet commerce investments. As a result electronics and semiconductor funding had largely fallen on the shoulders of so-called strategic investors, the likes of Intel Capital, Qualcomm Ventures and other technology companies with investment groups. These are also often system companies that have additional reasons for wishing to see technological progress besides the simple desire to make money.

However, there are some indications that venture capital may be swinging back to semiconductors but in a more focused and system-oriented way. And of course capital will flow to seek any advantage it can, so that where government subsidy is available the leverage of that capital is improved.

But as we have also said before, there never seems to be any shortage of entrepreneurs and university graduates with bright ideas who are eager to try and attract backing and make their mark in the world. This is a topic that was explored in the radio broadcast Startups: The Vital Seeds of the Electronics Industry.

The average age of startups in the Silicon 60 is about 5 years with 33 formed in that year or earlier and 27 founded in 2011 or later. The technologies and capabilities represented in the latest version of the Silicon 60 include: silicon and compound semiconductor manufacturing, digital ICs and SoCs for consumer applications, graphics IP, 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 WiFi and short-range communications, wireless power transfer, techniques for gesture recognition, image sensors, MEMS, environmental sensors, neural networks, vision and cognitive processing, resistive memory, quantum dot materials.

Next: Past fallers

From the previous Silicon 60 list it is notable that Riviera Waves SA (Sophia Antipols, France), a specialist provider of Bluetooth and WiFi semiconductor IP and protocol software, was acquired by Ceva Inc. (Mountain View, Calif.); that internet-of-things (IoT) company Neul Ltd. (Cambridge, England) was acquired by Huawei Technologies Co. Ltd. And Sand 9 Inc. (Cambridge, Mass.) was acquired by Analog Devices in about June 2015, for an amount thought to be in the region of $30 million to $40 million. Amantys Ltd. (Cambridge, England), a company formed to apply digital control to medium-to-high voltage electrical systems, closed earlier this year but was able to grab a minor victory from the jaws of defeat. As part of the winding up process the company was able to sell all of its assets and intellectual property to electrical power regulation company Maschinenfabrik Reinhausen GmbH (Regensburg, Germany). Maschinenfabrik Reinhausen said it intends to set up a wholly owned subsidiary in the UK to continue with the work that Amantys was doing.

It is not thought that these deals would have made much money for the investors but they do illustrate ways in which the seeds of electronics are continually cast off, planted nurtured and re-absorbed into ecosystem.

Related links and articles:

EE Times Silicon 60 version 16.1

4 Reasons for Intel’s $1.5 Billion Bet in China 

China Buy Its Way Into The Global IC Industry?

Startups: The Vital Seeds of the Electronics Industry

Silicon 60 v15.1 Reveals Shifts in Technology Focus

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