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Funding for startups

Quake Tools Up With $12 Million

You might call Quake Technologies Inc. a company that stays ready so it doesn’t have to get ready.

The six-month old, Ottawa-based startup had already signed a manufacturing agreement with an external foundry for chip fabrication before it even locked down its first institutional round of financing.

Quake’s preparedness went a long way toward impressing its most recent investors, Mohr Davidow Ventures (MDV), who've just bet $12 million that Quake will shake up the optical chip business.

"One of the reasons we like Quake is that they had a [chip] fab relationship intact," says Jim Smith, an associate partner at MDV. Smith says Quake's early assertiveness in that area convinced him they were concerned with more than just product design.

That’s not to say that Quake is going to have an easy time of it just because they’re aggressive dealmakers. In these days of irrepressible demand for optical products, even the most capable semiconductor makers are grappling with components shortages (see Components Shortage Gets Real). So far, MDV is Quake's only institutional investor. However, Quake was started with more than $3 million from several individual investors, including Adva AG Optical Networking (Neuer Markt: ADV) CEO Brian Protiva, who serves as an advisor to Quake.

The startup's board of directors includes Quake investor Dr. Yves Dzialowski, the former CEO of Epitaxx Inc., which was acquired a year ago by JDS Uniphase Inc. (Nasdaq: JDSU); Dan Trepanier, Quake's president and CEO; Petre Popescu, Quake's vice president of product development; and MDV’s Robert Chaplinksy and Jim Smith.

Quake officials won't yet name the firm that scored the deal to build its chips, but Michael Keenan, Quake's vice president of marketing and business development, should be credited with the assist. Keenan previously worked as a senior product line manager in Nortel Networks Corp.’s (NYSE/Toronto: NT) Microelectronics Group. One of his responsibilities at Nortel was to sell access to Nortel's fab facilities to semiconductor companies such as Quake.

Quake is designing physical layer chips for Ethernet, Infiniband, Fibre Channel, and Sonet/SDH applications that operate at speeds of at least 10 Gbit/s. Its main competitors will be Broadcom Corp. (Nasdaq: BRCM) and Applied Micro Circuits Corp. (Nasdaq: AMCC) (see Broadcom Buys Its Way In and Semiconductor Merger Mania).

But Quake CEO Dan Trépanier says his firm will be able to pack more features and functions in each chip than its competitors. "The typical solution AMCC or Broadcom has would require 3 to 6 chips [in a module] for a physical layer solution. Our solution will use 2 or 3 chips,” he says.

In other words, Quake hopes to provide systems makers with a chip that uses less power and is less costly than what’s currently on the market. Of course, everyone says that, but we’ll take Quake’s word for it, for now.

Quake won't have its first prototypes in its customers' hands until Q1 of 2001. Given that there's usually a 6- to 9-month lag between prototype delivery and product availability, Quake's first chips won't surface in the market until around Q3 2001.

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com

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