Making Chips on the Cheap

Silicon chips are a fundamental ingredient of every computer product. No silicon chips, no Silicon Valley.

But because prototype chips are tremendously expensive to manufacture, the price of developing new products can quickly skyrocket.

Enter MOSIS, a little-known Los Angeles cooperative that allows high-tech designers around the country to share the cost of manufacturing the tiny integrated circuit boards embedded in silicon chips that are the backbone of products ranging from computer processors to simulation software.

At its heart, MOSIS performs much like an ordinary film developer. Designers submit their chip specifications through the Internet or other electronic means, and MOSIS sends back the finished chips at prices far below those of traditional manufacturing sources. Instead of costing tens of thousands of dollars, the chips can be bought for a few thousand dollars.

MOSIS has drawn devoted customers from the ranks of university researchers, start-up firms and even manufacturing giants such as Hewlett-Packard Co.

But what customers value most about MOSIS is that by grouping a plethora of small orders, it is possible to produce prototypes and other low-volume chips that would otherwise be prohibitively expensive to manufacture.

In its 15-year history, MOSIS--an acronym for Metal Oxide Silicon Implementation System--has helped researchers develop such famous chips as Sun Microsystem’s SPARC. Other chips became the heart of MIPS Computer Systems, a microprocessor company that is now part of computer graphics behemoth Silicon Graphics. Hundreds of lesser-known businesses use the service as well.

“Certainly in some cases it would have been practically impossible” for these companies to develop chips without MOSIS, said Wes Hansford, engineering manager for the cooperative, which is part of USC’s Information Sciences Institute in Marina del Rey.

One of those companies is Myricom, a 2 1/2-year-old Arcadia company that designs chips to allow multiple computers to work together in parallel.

Without MOSIS, Myricom might have been forced to merge with another company that could provide access to wafer manufacturing, said Chuck Seitz, Myricom’s president and one of its founders. “We’ve been able to operate in a way that’s much more agile as a start-up company than if we had sold ourselves to some existing company.”

MOSIS receives orders from customers such as Myricom, then combines them into a single data file and sends it to a company such as Rockwell or DuPont that can make a mask, the chip equivalent of a photo negative.

The masks are then sent to fabrication facilities operated by Hewlett-Packard and other companies, which make chips out of silicon wafers--the equivalent of a photo print.

Package assemblers later slice the wafers into individual chips and encase them in ceramic packages with metal leads to conduct electrical signals. The packaged chips are returned to MOSIS, inspected, then delivered to customers. The process takes about 10 weeks.

“It’s a glorified Fotomat, except that it’s much more expensive,” Seitz said. “We send MOSIS our design files over the Internet, and the physical chips are sent back.”

MOSIS does this 2,200 to 2,300 times a year, and rings up $10 million in annual sales. The cooperative is run as a not-for-profit business and has become self-sufficient in the last few years.

“It’s a business, but it’s not a Netscape,” Hansford said. “This is not the kind of business that would interest a venture capitalist.”

MOSIS is so efficient that even at Hewlett-Packard--which owns a chip-making facility in Corvallis, Ore.--the integrated circuit business division uses the cooperative to manufacture prototypes of new chips.

“It’s very expensive to do a prototyping run through our fabrication facility,” said Jane Chung, account manager for the integrated circuit business division in Palo Alto. “You have to order a minimum of 12 wafers, and it costs at least $3,000 per wafer. It’s a sound judgment to go with MOSIS because they provide the same service and it’s cheaper.”

California businesses account for 40% of MOSIS’ business, but customers also come from Massachusetts, New York and other states, said Cesar Pina, director of the MOSIS service. Europe has fewer than a dozen chip-making cooperatives--all of them much smaller than MOSIS--and another has been started in Taiwan, he said.

It’s no coincidence that the United States is the world leader in creating application-specific integrated circuit chips and that U.S. researchers have the ability to create affordable prototypes with the help of MOSIS, said Hewlett-Packard’s Chung.

“We need more intellectuals, and we need a lot of geniuses to prove their concepts,” she said. “MOSIS makes it happen.”