Starting with semiconductor component product line management and trading:
Localization of the Silicon Valley Business Model in China by Golden Gate Integrated Circuit, Inc.金门桥集成电路有限公司：《硅谷商业模式的中国本土化》， Jeremy Tole, Daniel Chu, John Tole, Jin Luo
Start-up Modules in Comparison：
China Model 1: designers grow business
China Model 2: manufacture facility grows business
Alternate Model: starting as a business
China Trend 1: Many Fabless IC Companies: they started with a set of particular designs, further grew into businesses. It is designer-driven to grow into business. Small venture capital is given to designers to try out, hoping “if good, people will favor”.
China Trend 2: Many Manufacturing IC Companies: they started with a large-scale manufacturing built-out. It is fab-builder-driven to grow into business. Large venture capital is given to fab team to pay for high-cost facilities and capital equipment, hoping “if built, people will come”.
Between the two China Trends, so far they missed industrializing of component products, where a company starts with selling existing products by managing a complete eco-system: definition – design – development – sales – support – value-added applications. Then expand variations and grow volumes with featured advantages in broadness and depths of applications. To win over competition and achieve enabling products, the critical play here is how to start up a professional business at the beginning.
Professional IC Business Model from Silicon Valley Origin:
World Leading Silicon Valley Industries (such as TI, National, Maxim, ADI, Fairchild, etc.) started as Businesses! Step-by-step capitals are invested conservatively. Continuous and sufficient sponsorship on working capitals. Starting from existing product market, to test & identify market, boldly expand & grow features and product lines, into families.
It is the Real Professional Business Model of Silicon Valley Origin, not a designer’s growing-pain personal drag, that shall be encouraged and supported by China’s industrial administrators, and it can become an active part of a Provincial’s local-but-globalized economy.
AMS (analog & mixed-signal) IC’s Demography in Gross Profit Margins:
World Leader IDM: 40-80%; Silicon Valley Fab&Design-less: 30-40%; GGIC expansion into China: 20%, Chinese major industries now 10%.
Many AMS IC vendors sell the same and compatible product series with the same model number but under different Brands (such as 741 of a popular Op-amps). It is the solutions, the differentiated detail emphasis to support applications, and BOM, that matters in the market place.
First Tier Silicon Valley IDM companies can make 40-80% (the 80% was Jeremy’s record) gross profit. But their Engineering Overhead is high, thus if below 40% gross profit, the product line will have to be dumped.
Fabless, even design-less business (such as Codeka), only has 30-50 employees. But its in-system relations with first tier companies allowed taking over lower-than-40%-growth-profit product lines. Thus they made its 250+ product lines under a very lean operation. Its strength is in professional definitions of products and applications, and many 3rd party system solution developers (VAR) work for them worldwide.
Localizing Silicon Valley IC Business Model
… also sprach Jeremiah What GGIC does in China: We know the trick to generate large semiconductor component sales and revenues worldwide:
We take advantages on low-margin-satisfactory Chinese IC suppliers who surrender added values to us.
We have already identified and accumulated knowledge in trendy application areas:
Dedicated modules: WSN, Sensor, networking, electric-electronic-mechanic integration.
Enabling Imagers: IR for security; Low-light for automobile and transportation.
Energy Saving: chip set for LED lighting with Intelligent Illumination System (IIS).
Energy harvest: chip set for power management, optoelectronic and storage managing.
The key toward success here is establish the business’ scalability. We start forming 40+ 金门桥 (Golden Gate) brand products. Will pipeline to achieve USD100M sales within 3 years.
Technical Marketing: Jeremy Tole
Golden Gate Integrated Circuits, Inc. (San Jose 2012, Shanghai 2011)
Investment: Series A pending (Business Plan)
Matrix Systems (Shanghai) capacity since 2011:
- Beijing: 10M-gate high-speed FPGA-based SoC emulator and processor development systems;
- Kunshan State 863 Sensor Industrial Base: Sensor and Control systems solutions with Chip Sets products for LED Lighting, APL Lighting, WSN electric-electronic integration, power conversion, energy harvest, DSP and signal conditioning.
- Shanghai: Semiconductor IDM, technical planning and business development.
Seeking for investment partners for stages from IC trade and branding, fabless design and solution development, 8″ AMS fab and 12″ ASIC/ASSP fab in IDM.