BCO Technologies Plc, the tiny Belfast company which came to market last December with a revolutionary fabrication technique for analog integrated circuits (IC’s), says it is on course to claim its share of the estimated $20bn worldwide analog chip market. And with contracts in the pipeline from LM Ericsson AB and Siemens AG, BCO’s share of that market could be huge.
By Alex Sloley
The Northern Irish company, which at flotation employed just 85 people, made losses last year of 3.5m pounds on revenue up 182% to 1.3m pounds; roughly in line with the flotation forecast. Currently capitalized at 39m pounds, the company aims to break even in 1999. Analog chips are big business. Used wherever digital systems meet the real world, typical applications are in power supplies, engine controls, computer keyboards etc. and product life cycles are far longer than for their digital brethren. Power supplies, for example, are the second most expensive component inside a PC, but they are typically updated only at every third new model. BCO’s has a unique sales proposition for manufacturers of analog chips. It replaces silicon as the insulator in conventional fabrication techniques with glass, supplying bespoke, part fabricated BCO substrate based chips to be finished by existing IC manufacturers. The use of glass dramatically cuts the volume of insulation around individual transistors in an analog integrated circuit (IC). This yields smaller circuits (increasing performance) and also more chips per wafer, with four fold density increases possible. Since manufacturing costs are measured per wafer, and revenues are generated per chip, the underlying sales pitch of more chips per wafer is irrefutable. Interestingly, the process has not been patented. This was a key decision, according to founder and chief executive, Dr Scott Blackstone, who figured that patenting the technique was tantamount to telling the competition exactly how to do it. And BCO doesn’t have the financial muscle or the inclination to fight expensive patent law suits. Instead, the process is being kept as a trade secret. Take our wafers apart and its impossible to tell how we did it, says Blackstone, we invented the technology, and we currently have no competition. Having started out using facilities at Belfast’s Queen’s University, BCO now has its own clean room and manufacturing facility, leading to a tripling in revenues this year. Being located in Belfast was a crucial factor, as the company receives 45% of its multi-million pound capital expenditure budget in the form of government grants. This combined with cash resources from the flotation will see the company through to the end of the millenium, says finance director Dermott Simpson, by which time capacity will have doubled. By next year, Simpson expects many of BCO’s bigger clients to be happy with initial contracts and to be demanding large scale production. Siemens for example, initially ordered 200 wafers for an automotive locking system. Now the German giant has found a use for BCO chips in its phone systems; a single order that could utilize all of BCO’s existing capacity. Meanwhile, LM Ericsson, the third biggest telecoms equipment manufacturer in the world, wants to use BCO chips in its line cards, a central component in telephone switching. Providing BCO doesn’t fumble its technological lead, it’s heading straight for the big time.
