Vitesse on Perilous Path in Its Quest of Faster Chip

Vitesse Electronics was in the high-tech limelight last week with its announcement that it has developed one of the world’s fastest computer chips made from gallium arsenide, an advanced semiconductor material more versatile than silicon.

But the news was just another step on the treacherous path toward possible success for the 2-year-old Camarillo company.

“We recognize that the big guys are going to come in and pounce on anything we do, so we’ve got to build up a significant lead,” said Alfred S. Joseph, the ebullient former Rockwell International executive who founded Vitesse.

So far, Vitesse has yet to turn a profit. Its prototype chips, scheduled for delivery next month, will bring in sales of only several thousand dollars, and the firm has no other revenue. The company says it won’t be able to mass-produce the chips for at least a year.

Vitesse also faces a long-term challenge from recent improvements in silicon technology. Enhanced silicon chips, now capable of 100,000 logic functions, are still much faster than Vitesse’s chips, which currently can handle no more than 600 functions.

“Shooting at a moving target, in this case silicon, is never easy,” said Michael Murphy, editor of the California Technology Stock Letter.

Murphy said advances in silicon threaten the gallium arsenide industry because silicon, which fueled the microelectronics revolution, is easier to use in existing computers--even though transistor for transistor, gallium arsenide is five to six times faster.

Furthermore, silicon, an excellent conductor of electrons found in abundance in ordinary sand, is cheaper than its challenger. Gallium, a rare element, must be combined in a costly process with arsenic to make gallium arsenide.

Vitesse’s breakthrough was in finding a commercially viable way to arrange hundreds of transistors on individual gallium arsenide chips in a configuration that allows a series of chips to work together. Previously, the chips could accommodate only a handful of transistors.

The new configuration is based on a principle that allows for two kinds of transistors on the same circuit, instead of just one. As a result, fewer transistors are needed to perform a logic function.

With its advance, Vitesse joined the pacesetters in gallium arsenide technology. Aside from Vitesse, only McDonnell Douglas Corp. has made a large-scale integrated circuit from the substance. Its chip is intended for the military, rather than the commercial market that Vitesse is pursuing.

Despite its leadership in the gallium arsenide industry, Vitesse is just one of the pack of companies in its other endeavor. Vitesse and several competitors are struggling to develop mini supercomputers, which are cheaper, less powerful versions of the so-called supercomputers made by Minneapolis-based Cray Research and others.

Supercomputers and their mini-supercomputer cousins are capable of solving complex problems, such as how much a suspension bridge might twist or sway with various loads of cars, trucks or trains.

But while state-of-the-art Cray computers can cost up to $10 million, mini supercomputers are in the $200,000- to $1-million range. They often are favored by laboratories and design firms that have many engineers working on computers simultaneously.

Vitesse’s plan is to design the mini supercomputers so they can eventually use gallium arsenide chips. The early models will be made with silicon chips, at least until the company can make gallium arsenide chips as cheaply as it can buy silicon ones.

Although developing mini supercomputers and gallium arsenide chips at the same time could give Vitesse an advantage over its competitors, some experts worry that Vitesse might be getting in over its head.

“Taking on both makes me nervous,” Murphy said.

Joseph, who paces around the office in coat, tie and Reeboks, seems to take the uncertainties in stride. The Vitesse chief executive diagrams circuit boards on a blackboard with the ease of a professor at a graduate seminar, sprinkling the heavy material with one-liners.

Others have become believers in Vitesse’s technology. Even McDonnell Douglas’ microprocessor program manager, Bill Geideman, characterized Vitesse’s new chip as a “breakthrough.”

Market Chances Assessed

Gene Miles, an analyst for Dataquest, a San Jose market-research firm, said Vitesse could seize the lead from its mini-supercomputer competitors by designing computers with gallium arsenide now instead of later.

Miles, noting that companies like Alliant Computer Systems of Littleton, Mass., and Convex Computer Corp. of Richardson, Tex., already have mini supercomputers on the market, said Vitesse still has some advantages.

“As a start-up, they’re not suffering yet from having to struggle in the marketplace, constantly revising their plans,” Miles said. “It could allow them to build a better computer quicker.”

Miles also noted that Vitesse’s management has to answer only to one backer, Norton Co. of Worcester, Mass., which acquired 50% of the company for $30 million shortly after Vitesse was started in September, 1984.

The impetus for launching the company came from Joseph. While a senior science executive for Rockwell’s Science Center in Newbury Park, he decided to turn some of his know-how into an entrepreneurial venture.

It hasn’t been easy. The introduction of both the company’s new chip and its computer, which now is due to come out in September, 1987, are both running several months behind schedule. Joseph said enhancements to both products caused the delay.

Dubbed ‘Gallium Gulch’

Meanwhile, another gallium arsenide company operating in the area of eastern Ventura County sometimes called “Gallium Gulch” has been plagued with troubles. GigaBit Logic of Newbury Park forced its founder, Fred A. Blum, to step down as chairman and president last March following a dispute with Analog Devices of Norwood, Mass., a maker of electronic components that is a major shareholder.

In addition, earlier this month GigaBit dismissed two vice presidents and 31 other employees in anticipation of slower business. The company, which has developed smaller-scale gallium arsenide chips already on the market, now employs about 100.

Vitesse, on the other hand, has increased employment over the past year from 80 to 128. Of those, fewer than a dozen work in the automated production rooms. The others are designers, engineers, administrative workers and marketing personnel.