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Technology Stocks : VIRL: Virage Logic Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Artslaw who wrote (1)	12/12/2001 2:10:18 PM
From: D. K. G.	Respond to of 2

Virage's Helping Make Memories BY JAMES DETAR INVESTOR'S BUSINESS DAILY Internet & Technology Wednesday, December 12, 2001 investors.com Semiconductor makers continue to shrink their chips and pack more and more features on them. That boosts their speed and drives prices down. It also creates headaches. As these devices get smaller and more complex, it gets harder to make and test them. Enter Virage Logic Corp. (VIRL) The Fremont, Calif., company makes memory designs. Chipmakers license its memory designs. They use the designs to build small memory elements, which they embed in their system-on-a-chip devices, or SOCs. They're small, so they're often used in things like cell phones. Virage Logic's latest is the STAR (self-test and repair) line. Memory is one of the toughest designs to make. So chipmakers prize the self-test and correct feature. It saves them money because they don't have to invest in expensive test gear. Virage Logic has annual sales of only $31 million. But it's growing. And its stock price jumped from 9.5 on Oct. 30 to around 16 at the end of November. In an interview with Investor's Business Daily, Virage Logic co-founder and Chief Executive Adam Kablanian shared his vision of the company. IBD: How did Virage Logic get started? Kablanian: Our CTO (chief technology officer) Alex Shubat and I founded the company back in 1996. Our vision was to provide embedded memory for SOCs. We went public in August 2000. IBD: Who are your biggest customers? Kablanian: Today our customers include TSMC (TSM), PMC Sierra (PMCS), Altera (ALTR) and Intel (INTC). We have 16 who are developing products that use our IP. IBD: How has Virage Logic been able to continue growing in this down year for chips? Kablanian: Our customers are licensing our products for (chip) designs that they will make two or three years out from now. We've been maintaining our value. What we put forth as guidance at the beginning of the year — we're pretty much following that. IBD: So you're not seeing a slowdown? Kablanian: We're not seeing a slowdown. We hired 45 people last quarter. We were 100 people last year, and we are over 200 now. And we will continue hiring. Our business is growing, and we have lots of new products. That's why we believe we have a good shot at getting a good piece of business from the stand-alone memory chip market. IBD: What's your main product line? Kablanian: We introduced the industry's first STAR memory system. STAR stands for self-test and repair. In the past, people bought stand-alone chips when they needed a large amount of memory. Now, as they integrate all these millions of transistors onto a single chip, they need the same memory functions. What people really need to do is solve the problem of testing and making these devices. IBD: How does your STAR memory design work? Kablanian: We came up with memories that have redundancy. If there's a defect inside the memory, you can replace that defect with one of the redundant elements. We introduced our second version in July — the STAR embedded test processor. We have a little microprocessor inside the chip that does the test and repair. We solve two problems — the test problem and the yield (number of good chips in a batch) problem. IBD: Do you license your embedded memory designs to chip companies? Kablanian: Right. We're purely an intellectual property company. We don't have any inventory. So we license the design, and collect licensing fees and royalties on chips that contain our IP. IBD: Do microprocessor makers like Intel and AMD (AMD) use your memories on their chips? Kablanian: Intel has an internal, 200-person design team doing embedded memory. So Intel will probably continue to do that because they are doing it for one chip (Pentium line). They can afford to have all these teams doing one product. But in our business, we have multiple chip offerings. That's why Intel's networking group uses our memories. Their (network) chipset group engages with us. We have a fair shot at anything outside of microprocessors. IBD: Who are your main rivals? Kablanian: We have two classes of competitors. The biggest are within the chip companies. We compete against engineers at Intel that are today designing embedded memory. They provide that internal service to their design group. And there are EDA (electronic design automation) library companies like Cadence (CDN) that provide design software tools, standard cells and other elements. And they offer memory as part of that. IBD: What are the benefits of embedding memory onto the chip, rather than having it as a separate chip? Kablanian: For today's system-on-a-chip, first you do the memory test to determine which bits are failing and which are not. Then you repair them. Then you test again. What we're doing is eliminating that need to do memory tests externally. It reduces the test cost for SOC, which has lots of memory.