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Israel’s ColorChip raises $25 million in growth funding

The company is the only Israeli chip maker that not only produces, but also manufactures their own product, called SystemOnGlass
Geektime, November 22, BY  Alex Lazear

We take for granted just how prevalent computer chips are in our day-to-day lives. The fact that semiconductors are a$90 billion industry demonstrates just how.

ColorChip has been supporting top tier data centers since its founding in 2001 with their optical communication solutions and recently announced that it raised $25 million in new funding, putting their total funding to date to $70.2 million.

A more complicated internet needs a more powerful chip
To many the internet is just a series of cables, or the idea of connecting multiple computers. The reality is that as our usage of the internet has grown, so has its physical structure. With the advent of streaming technology, cloud computing, and virtual reality, it has become necessary to have data centers where the information can not only be stored, but also processed.

ColorChip has been supporting top tier data centers since its founding in 2001 with their optical communication solutions. In electronic circuits, the primary piece of the chip is the transistor, whereas in optical circuits, there is no single dominant device, as many are required to collect data. This allows them to transmit data on optical wavelengths typically in the visible spectrum or near infrared, allowing for faster speed and more data to be carried. However due to the fragility of the material and the amount on the circuit, they are difficult to make and often have long production times, making traditional electronic integrated circuits the cheaper manufacturing option.

This is where ColorChip’s unique SystemOnGlass™ technology comes in. SystemOnGlass chips are hybrid optical integrated circuits, which packages both active and passive components into a Planar-Lightwave-Circuit platform. ColorChip embeds the passive components of the chip on a glass wafer, while the active optical components are mounted on the PLC platform, mirroring the production method of electronic circuits, where silicon transistors amplify the signal. This allows for production that matches the speed and ease of traditional semiconductor creation.

What comes next for ColorChip
This current round was led by Israel Growth Partners, with Gemini and BRM contributing. It was also announced that Israel Growth Partners General Partner Haim Shani will be joining the ColorChip Board of Directors.

A large investment can sometimes be a sign that the company has had offers for acquisition or is getting ready to go public. When Geektime asked Yigal Ezra, ColorChip’s CEO, about this he explained that, “The company is in high growth mode and if additional funding is required, with the current trajectory it is likely to qualify for an IPO within the next couple of years.”

Israel has long been known for its semiconductor work. This is part of why Intel’s largest research and development center outside the U.S. is located in Haifa and why Amazon acquired secretive semiconductor platform Annapurna Labs for $370 million. In 2014, the semiconductor sector actually garnered more than a third of Israel’s total hi-tech exits, landing $5.7 billion of a total $15 billion made in tech startup acquisitions, making it the most successful field in Israeli hi-tech exits.

What makes ColorChip unique is the type of chip that they are making and their production methods. They have not only developed their products, but also vertically integrated and manufactured the core technology in their wholly owned and operated state of the art fab center in Israel. This allows them to control production volumes and flexibility in bringing products from development to production. This is unique in Israel, and rare in the world of chip production, where developers often outsource production. With the massive funds raised, ColorChip plans to scale production further to growing demand.

All of this points to a bright future for ColorChip, as their product becomes more important in everyday life. So long as there is an appetite for streaming HD movies from Netflix, they’ve got nowhere to go but up.