Ireland attracts US startups

March 31, 2021 // By Peter Clarke
Ireland draws startups to relocate from Silicon Valley
With a corporate tax rate of just 12.5 percent, the Republic of Ireland has proved an attractive place to relocate for a couple of startup companies that were founded in the US.

Reasons given for relocating are problems for US companies selling into China and the ability to afford and retain engineers in Silicon Valley and California. Companies that have made the change include power semiconductor startup Navitas Semiconductor and programmable mixed-signal and power company AnDapt.

Navitas Semiconductor Inc. is located in El Segundo, California, and is the operational center of the company. Since its formation in 2014 the company has become successful vendor of gallium-nitride-on-silicon chips with over 15 million devices shipped. And the company's co-founders Gene Sheridan (CEO) and Dan Kinzer (CTO) had both previously worked for International Rectifier Corp. which was headquartered in El Segundo before it was acquired by Infineon Technologies GmbH in 2015.

Navitas Semiconductor Inc. is now a subsidiary of Navitas Semiconductor Ltd. (Dublin, Ireland), and Dublin is listed as the headquarters.

Stephen Oliver, vice president of marketing, told eeNews Europe that the main reason for putting the company headquarters in Ireland was that it allowed the company to bridge the communications divide between California and south-east Asia. California is where the product development is based and south-east Asia is where the customers are located.

"It's a very international world and the Dublin HQ gives us the opportunity to smooth out any ups and down between individual parts of the world," said Oliver. "The Dublin HQ is currently small, with most team additions in Shenzhen, Hangzhou, Shanghai, Taipei – to match customer needs. We’re over 100 people now, so a long way from our startup days in 2014."

Many other locations in Europe would also provide the same communications benefit but Ireland stands out as having one of best educated workforces and lowest corporate tax rates. The United States corporate tax rate is between 21 and 33 percent depending on the state; the UK is 19 percent and most of Europe somewhere between 25 and 30 percent. One of the reasons such corporate tax rates may be important is that multinational companies can legitimately and do use internal contracts and dealings such as loans and debts to move profits to the juristiction where the tax burden is lowest.

"We're ramping production quickly – shipped 15 million-plus units to date – now at over 1 million units per month, so getting close to the net profit point, so rates always help," Oliver said.

AnDapt LLC (San Jose, Calif.) has pioneered digital programmable fabric with analog power enabling integration of heterogeneous power rails, optimization for multiple applications and the ability to monitor, control and manage power. It also provides in-the-cloud design tools to create application-specific PMICs. Like Navitas, AnDapt was founded in 2014.

The company was co-founded by Kapil Shankar, a former vice president of marketing and business development at FPGA company Xilinx, and Tom Chan, previously with SiliconBlue and AMD. AnDapt LLC is now a wholly owned subsidiary of AnDapt Holdings Ltd. of Dublin Ireland.

Bill McLean, CEO of AnDapt, told eeNews Europe in a phone interview: "Ireland is going to be the operational headquarters. There will be an Irish development subsidiary, a US development subsidiary and our China operation in Chengdu."

McLean gave the reasons for the relocation as being the lower cost and retention of engineering talent in Ireland and how a European company is better placed than a US one to sell both its products and itself.

"Ireland has a very deep pool of talent. There's FPGA activity of Xilinx in Dublin, there's Microchip in Cork. Analog Devices in the south of Ireland. We can hire at half the cost of what we would pay in San Jose. And let's face it most of those engineers would already have been rejected by Google, Apple, Facebook. In Silicon Valley retention of staff is a problem."

"Second: for our sales people in China, getting on a vendor approval list is difficult if you are US company. It's easier if you are European and it is also easier to attract investment. We are in discussions with Chinese investors," said McLean.

Such moves are not new. A number of publicly-traded electronics companies have engineered moves to Ireland by way of acquisitions. One of the most notable examples is Medtronic plc, a US based medical device company that generates most of its sales and profits from the US healthcare system but, since the 2015 acquisition of Covidien, is headquartered in Dublin. In its 2020 fiscal year Medtronic plc made a net profit of about $4.8 billion on revenue of $28.9 billion.

However, what is relatively new is the way in which semiconductor technology is now being regarded as increasingly strategic by the United States, by Europe and other regional and national authorities.

One thing that Navitas and AnDapt have in common is the presence of Brian Long on their boards of directors. Long is the founder of Atlantic Bridge Capital and prior to that Long was the founder of Dublin-based Parthus in 1993, which he took public on the Nasdaq and London Stock Markets.

Almost by definition startups have limited immediate commercial significance and may be able to fly under political radar. If so expect more globally important startups to be headquartered in Dublin.

www.navitassemi.com; www.andapt.com

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