Chip Maker Hopes to Sweeten Its Pot With ‘Sugar Cube’ : Technology: Electronic innovation nets Irvine Sensors, which lost $8.8 million from 1983-90, a deal with IBM and prompts public-offering plan.
Irvine Sensors Corp. sees a bright future in a “sugar cube,” and it hopes investors will share its vision.
The company has developed a technology to stack as many as 128 computer memory chips on top of each other so that greater computing power can be packed in a device the size of a sugar cube.
To finance the next phase of its growth, the 38-employee company on Thursday registered with the Securities and Exchange Commission to raise $3 million by selling 725,000 shares of stock at $4.25 apiece. In an earlier SEC filing, in May, the company had proposed selling 2 million shares but scaled that back.
The funds raised through the public offering, underwritten by Paulson Investment Co. in Portland, Ore., will enable Irvine Sensors to begin manufacturing and selling a four-chip version of the cube, said James Alexiou, president of the publicly held Costa Mesa firm. The ultimate goal is to capture a slice of the $113-billion worldwide semiconductor chip market.
Irvine Sensors officials say they have spent more than $35 million on research and development in the past 12 years--a long time for “start-up.” Their perseverance has finally paid off in the form of an investment from International Business Machines Corp.
“Recent events have born out what we have said,” Alexiou said. “Irvine Sensors is still not a stock for orphans and widows, but the risks have dropped with the IBM investment, and the rewards are higher.”
Jon Iwata, spokesman for IBM, said the computer giant decided to sign a joint development agreement with Irvine Sensors last month because the small firm has the leading edge in chip-packaging technology.
Alexiou said the IBM deal will have a financial effect on Irvine Sensors, but he would not spell it out. IBM expects to use the technology, he said, in a broad line of chips for everything from supercomputers to laptop computers.
Chips are the building blocks of electronic equipment. Chip makers such as IBM can pack millions of components onto a single thumbnail-sized slice of silicon.
During the 1980s, chip packaging became a hot industry as engineers ran out of ways to miniaturize the sophisticated, two-dimensional electronics any further.
Iwata said Irvine Sensors’ technology could improve the density of memory chips tenfold with its three-dimensional stacking. The smaller distances between chips could also lead to vast improvements in speed, power reduction and reliability, he said: “We think it will give us a competitive edge.”
Years ago, Irvine Sensors found that it could adapt sensors developed for the military to the commercial chip-packaging market. The challenge, however, has been far greater than expected, Alexiou said.
Progress was agonizingly slow, and the company lost $8.8 million between 1983 and 1990. It stayed afloat mainly because of Pentagon research grants. Irvine Sensors tested more than 1,000 types of glue, for example, before it found the right one. It also had to develop 52 manufacturing steps.
The deal with IBM was negotiated over three years as the technology moved from the experimental stage to a finished product, Alexiou said. Now final tests will determine whether the stacks of paper-thin layers can be mass-produced.
Other hurdles that Irvine Sensors must overcome are reducing heat generation and finding ways to ensure that the device will function even if one particular chip fails, Iwata said. IBM will supply its know-how for mass manufacturing, he said.
Alexiou said the agreement with IBM allows Irvine Sensors to market the jointly developed technology to other major chip makers.
“Before IBM, they asked us why they should invest in us,” said John Stuart, chief financial officer for Irvine Sensors. “Now they have to ask how they can avoid us.”
Stacking the Chips
Irvine Sensors Corp. has figured out a way to package computer chips in cubes to increase power and save space.
Capacity: Can stack as many as 128 memory or processing chips
Development cost: $35 million
Years in development: 12
Manufacturing: 52 steps required
Applications: Military sensors; high-powered computer workstations; neural networks, which mimic the functions of the brain; miniature hard-disk drives for laptop computers.
Source: Irvine Sensors Corp.
