technology GaAs microelectronics
But despite this tremendous investment, they failed to generate a profit. This was partly due to unforeseen events in Europe that were completely outside of their control. Led by the Solidarity movement in Poland, communist countries were turning to democracy, and the US government felt that it made sense to drop investment in the Star Wars program given the new world order. Sales to defense companies also received a massive blow due to cuts in the defense budget. The proportion of gross domestic product for defense was trimmed by 25 percent between 1986 and 1991, and further cuts occurred throughout the 1990s.
Anadigics Warren, NJ, facility was built on a site
previously used by United Technologies, which built its factory in 1953
for all its investors.
Rosenzweig knew that GaAs expertise was crucial to the company’s success. He could have tried to poach former colleagues from MSC with this skill set, but he didn’t want to risk upsetting his former employer. “Instead, we made a strategic decision to go out of our normal circle and get the best and brightest that was possible.”
This quest turned up Charles Huang, head of the RF device division of silicon-valley start-up Avantek, a microwave component manufacturer. Huang could also bring a different, West-coast culture to the team, and Rosenzweig was delighted when this GaAs expert agreed to co-found Anadigics.
One of Huang’s great strengths was his deep knowledge of metal semiconductor field effect transistors (MESFETs), the universal technology of the time. “In 1985 the HBT was still a laboratory curiosity, being funded by DARPA for various development applications,” explains Rosenzweig. MESFET manufacture had the great advantage of not requiring any epitaxial steps, and was based around the implantation of ions into a semi- insulating substrate.
Piles of cash The three founders found that they had plenty of cash to play with. They raised $8 million of first round funding in 1985, and quickly followed that up with a further $15-20 million. Today many start-ups would use this funding for development of chip designs, and outsource their manufacturing, at least initially. However, back then it was a different world, and Anadigics fitted into the philosophy of the time. “We created a vertically integrated, real-men- have-fabs company,” recollects Rosenzweig, who had a further $8 million at his disposal to buy the capital equipment for the 3-inch GaAs fab.
26
www.compoundsemiconductor.net June 2010
Anadigics clearly needed to target new markets with different products, which would have to be far cheaper. Fortunately it had already carried out some of the groundwork. “Although we had built up our business plan around Star Wars, we did not want to only be a defense company,” explains Rosenzweig. From the outset the Warren outfit had also been investigating opportunities in the satellite communication market; in the cable TV market, where GaAs could be used in tuners; and in fiber optic telecommunication, where GaAs chips could be used to make laser drivers and receivers. The only application that Anadigics did not consider venturing into was GaAs ICs for logic circuits in super computers, a market that was already cornered by the likes of Vitesse and Gigabit Logic.
Although there were plenty of promising opportunities for GaAs ICs, Anadigics struggled to find a high-volume contract. At this point the company was only bringing in sales of a few million each year, nowhere near enough to generate the cash to pay for the wages of 50-60 staff, a high R&D bill, and the scores of 3-inch, $1000 GaAs substrates that were being consumed. This state of affairs resulted in a burn rate of $8 million a year. “We were grossly unsuccessful, but no different from anyone else at that moment in the field,” says Rosenzweig.
By 1988 Anadigics was running out of money fast. It appealed to investors, and raised another $10 million that kept bankruptcy at bay for a couple more years. But when that additional investment ran out it was clear that the company needed a new strategy. Rosenzweig’s plan was to find a strategic partner, and he found two allies in Europe: Thompson CSF and Philips. Although no business came directly from eiter of these relationships, the faith of these European partners was incredibly helpful to Anadigics, because it encouraged existing investors to part with more of their cash.
One problem still remained: uncovering the killer application. Again, Europe played a hand in Anadigics’ fortunes, with British Sky Broadcasting and Sky independently launching satellite TV. “We came across a company called Continental Microwave, which had put in a contract for one million low-noise converters,” explains Rosenzweig. Continental’s CEO believed that this
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