picoChip Scores $20M, Ships 1M Chips
Those are big numbers for the fledgling femto market. (See Who Does What: Femtocell Services.)
The new funding comes less than a year since picoChip announced it had raised $20 million from existing investors, in November 2009. At that time, the company said it planned to go for an initial public offering (IPO) sometime in 2011. (See PicoChip Bags $20M, Plans IPO.)
Now, with the new $20 million injection, picoChip has not set a date for an IPO, although that is still the exit plan, according to the company's VP of marketing Rupert Baines.
All of picoChip's existing investors participated in the latest funding round, namely Atlas Venture , Highland Capital Partners , Intel Capital , Pond Venture Partners Ltd. , Rothschild , Samsung Venture Investment Corp. , and Scottish Equity Partners . With the new money, picoChip wants to hire more engineers in its development centers in Bath, England and Beijing. The company plans to increase its 150-employee base by between 25 percent and 30 percent.
"The market is taking off," says Baines. "Our volumes are growing very quickly so there are a lot of opportunities. And having a lot of cash on our balance sheet puts us in a position to seize those opportunities."
Some of those opportunities are in Enterprise Femtocell and metro femtocells, small cells for Long Term Evolution (LTE), as well as adding new capabilities to its femto silicon such as self-organizing network (SON) features and "smartSignalling." (See Femto Watch: Vodafone Means Business in Spain, Sniffer Femtos, picoChip Tackles 3G Signalling, PicoChip Unveils LTE Femto Chipset, and PicoChip Unveils Low-Cost Femto Chip.)
PicoChip's other news is that it has sold 1 million femtocell chips and claims to be on track to record quarter-on-quarter revenue growth of 50 percent in the current calendar quarter.
But the femto chip pioneer is the first to admit that the market has not grown as quickly as expected.
"The femto market has been slower than we all hoped," says Baines. "It hasn't happened as quickly as analysts predicted."
Baines says this is due to the difficulty of integrating the femtos into operator back-office systems.
"In hindsight, the technology and integration is harder than people thought," says Baines. "The initial trials were so successful and the technology worked, but [we] underestimated the complexity of scaling that to big volumes. This has taken quite a long time to get right."
At the time of picoChip's last funding news in November last year, CEO Nigel Toon said that the company would ship 300,000 chips in 2009, and "ten times that amount next year." But this estimate of about 3 million chips to ship this year looks over-optimistic now.
"No one is expecting 3 million this year," says Baines. "But [the volumes] depend on when operators launch."
News of more femtocell launches could be revealed next week as the tiny indoor base station industry gathers in London for the Femtocell World Summit. Light Reading Mobile will be there too.
— Michelle Donegan, European Editor, Light Reading Mobile