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Vinod Dham floats fund for chip designs in India

Fakir Chand in Bangalore

Vinod K Dham, acclaimed as the father of Intel's Pentium processor, has joined hands with Tushar A Dave, founder of Armedia Inc, to float NewPath Ventures for incubating five hybrid Indo-US companies that will focus on chip-making, embedded software and system design.

With an initial investment of $5-10 million in each of the five ventures, Dham and Dave will be involved in all the companies being set up in the next 18-24 months as co-founders and managing members of the investing or holding company.

The first company is being set up in Bangalore this month with a seed capital of $50 million, including $40-million venture funding from CMEA Ventures and Chrys Capital, which are funded by the US-based NEA.

"The hybrid companies will be registered in the US with their product development centres located across India as separate subsidiaries. While their marketing and customer interfaces will take place in the US, Europe and Japan, their design and development teams will operate out of India with about 100-500 employees in each of them in the next 2-3 years.

"The second venture will be set up in Hyderabad, and the remaining will be located depending upon the kind of entrepreneurs and investors who will be joining us subsequently," Dham declared in Bangalore on Thursday, adding that the investment in other four companies could be in the same range as in the case of the first venture.

The core chip design infrastructure, which will operate from Bangalore, will provide turnkey solutions from specification to products and incubate new ideas in the areas of mobile communications and messaging, data centres, reliability and manageability and delivery of rich media, including entertainment products to the home segment.

"Our game plan is to ensure significant reduction in development and production cost of chip designing, chip making, embedded software, and system designing, though product cycles may be same as elsewhere." Dham stated.

The size of the market being addressed by all the ventures is estimated to be around $30 billion currently.

Though India has proved beyond doubt its capabilities in the software services arena, Dham thinks it was high time India had moved a notch higher and showcase its expertise in hardware design too.

"We want to leverage India's tremendous technology talent pool by having our development subsidiaries located across the country to serve global markets, and provide one-stop solutions in areas such as chip and system design," Dham disclosed at a media briefing of the new venture.

Bringing in two decades of domain expertise by each of them, Dham and Dave will identify the technology areas that will be focus of each venture as their products will be specific with multiple applications

On account of strong relationships both Dham and Dave have with premier US companies, the marketing focus of the ventures will be initially in the US, and later extended to Japan, Taiwan, Korea and Europe.

The product development centres will attract a talent pool of high-skilled lateral chip-making, embedded software and system design engineers, including many of them who are currently based in the US and want to return to India to work on the emerging technology areas.

"We will make the chips, the design, and the systems that will be licensed to global manufacturers for fabricating them as products, which can be used in servers, PDAs, communication devices, including cellular and wireless and home entertainment," Dave asserted.

The intellectual property rights will, however, be retained by each of the subsidiary making them.

Having pioneered the Pentium processor during his 16 years of working with the global-chip manufacturer Intel, Dham went on to set up Silicon Spice to develop Voice over Internet Protocol solutions for the communications market. Silicon Spice was later acquired by Broadcom Corporation.

An old hat in creating Indo-US companies like Arcus Technology, Armedia and Vengines, Dave is renowned for pioneering the concept of fundamental shift in value addition from tech companies in India.

Prior to co-founding NewPath Ventures, Dave was instrumental in helping Broadcom enter new market segments through an aggressive acquisition strategy in the areas of WAN, broadband, cellular, and wireless as vice-president of its new business development.

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