China-based IC design firm Sage Microelectronics (Sage Micro) recently raised CNY240 million (US$35 million) in capital investment, which will be used toward the development of high-end controller chips for enterprise-class data storage and server products.
China's economic growth has long been fueled by its flourishing housing market. Investors prefer to bet their money on tangible assets such as machinery equipment and real estate and look down on the value knowledge industries like the semiconductor sector can create. In fact, China has always relied heavily on imported semiconductor chips. Concerned over such dependency on foreign supply, the China government is taking the initiative to change things around with its unique "state-led movement." It looks to build semiconductor plants across the country as a way of fostering a domestic IC industry. However, as China-based IC design firms still have a hard time securing investments from venture capital funds, they don't stand a chance in the competition against international companies. The fact that privately operated Sage Micro was able to raise a large sum of capital in this round of funding in addition to the launch of the Shanghai Stock Exchange's tech-focused STAR Market signifies the China government's clear determination toward incubating domestic technological firms with core competence.
Founded in 2011, Sage Micro has risen to become China's leading brand of storage controller chips. Its R&D team has created a wealth of IC design intellectual property (IP) in computer interface and solid state disks (SSD) in more than a decade, a rare achievement among its peers. Over its eight-year history, Sage Micro has been recognized as China's High and New Technology Enterprise, integrated circuit design firm, designated producer of commercial cipher products, Zhejiang Province Enterprise Research Institute and Zhejiang Province Key Laboratory. As a matter of fact, Sage Micro's mobile storage, SSD, and storage array controller chips are being used by international leading storage manufacturers, making it a key supplier of chips used in storage cards, USB drives, external hard disk drives (HDD), SSDs, large-scale storage arrays, computer bridge circuits, high-speed server bus and accelerators. As one of the very few China-based IC design firms capable of exporting semiconductor solutions, what Sage Micro has achieved is truly commendable. With the additional US$35 million capital in place, Sage Micro will use the fund to promote collaborations with international strategic partners and jointly develop high-end controller chips for enterprise-class products, according to information the company has made public. The deal not only indicates that international leaders are paying attention to the China market and recognizing Sage Micro's technological strength but also that Chinese investors are starting to take notice of the value IC design firms can bring. Companies with core technological competence are coming into play and the market can expect more Chinese IC design firms to rise up over the next couple of years.
Established by a team of Silicon Valley veterans, Sage Micro acquired Initio Corp, a Silicon Valley design house with complete bridge controller IC technologies and product offerings. Through the acquisition, Sage Micro gained access to physical layer and protocol layer interface technologies including SD/MMC, PATA, SATA, SAS, USB2.0/3.0 and PCIe, which are applied to storage cards, motherboards, hard disks and disk arrays. Its customer base has also expanded to include leading international hard disk manufacturers and computer companies. Being the first in China to introduce an SSD controller chip, Sage Micro brought its first SATA SSD controller chip to reality in 2012 - China's first locally developed multi-core SSD controller chip. In 2014, Sage Micro unveiled the world's first SSD controller chip supporting up to 5TB capacity at Flash Memory Summit (FMS). At that time, a standard 2.5" SSD with 9mm thickness came with maximum 10TB capacity. The jump of five times in capacity wowed the market and set a new SSD industry record. Furthermore, Sage Micro is one of the lead providers of storage bridge controller chips in today's global market.
Leveraging its core IC design technologies, Sage Micro provides a full spectrum of self-managed and self-controlled solutions including large-scale data storage, encryption modules and controlled self-destruction SSD. Its solutions are certified by the China Office of State Commercial Cryptography Administration (OSCCA) and comply with the US NIST/FIP-140 standards to enable robust data security at the chip level. At home and broad, Sage Micro is considered an expert in storage controller technologies with the ability to develop unique solutions. The company's CEO Dr Jerome Luo is among the organizers of FMS held in Santa Clara every year and he also hosts forums in China, which are part of his efforts to help China's storage industry synergize with the international community.
Commenting on the company's Internet strategic planning, Dr Luo noted, "Sage Micro gears its efforts toward enterprise-class SSD controller chips and disk array controller chips. Competition in these high-end controller segments is at the global level and it requires extensive technological know-how." Leveraging the technological strength built up through years of development, Sage Micro is working on disk array controller chips, which will be the core designed with intricate technologies to power massive-scale data storage comprising hundreds and thousands of hard disks. In addition to existing partnerships with manufacturers of bridge controller chips and hard disks, Sage Micro will further engage in collaborations with new storage device suppliers to drive the research and industrialization of enterprise-class SSD, large-scale disk arrays and server peripheral bus controller chips. No Taiwan-based firms have ventured into these market segments while China-based IC design houses lack sufficient IP in these areas so a few industry giants, such as Broadcom and others, hold key technologies and dominate the market. Manufacturers of large-scale data storage including those based in China have no choice but to purchase critical controller chips from the small number of companies that are monopolizing the market.
Take the flash memory controller chip market for example. With the China government actively advocating and promoting development in this sector, many firms have debuted controller chips that are purportedly developed in house. In fact, dozens of firms have emerged in the past couple of years but few of them have the real core competence to move forward to volume production. China's IC design industry has yet to build up solid technological strength, particularly lacking extensive IP in specific fields. Some of the so-called in-house developments are actually complete IC designs sold by international fabless firms in the form of total solutions to Chinese companies or organizations which then package and market them as domestically produced chips. However, this does not mean China-based firms have nothing to show for their efforts. There are companies that stand out. For example, DRAM controller chip developer Montage successfully went public on the Shanghai Stock Exchange's STAR Market. GigaDevice as a NOR flash vendor got IPO successful, too. With state-backed investments into flash memory production lines, Tsinghua Unigroup is making good progress. Sage Micro is set become a rising star in controller chips for computer peripherals, large-scale data storage and servers.
Amid escalating US-China trade tension, China is ramping up efforts toward "hard technology" developments, especially targeting the semiconductor industry. The launch of the Shanghai Stock Exchange's STAR Market is aimed to encourage IC firms first and foremost. Accordingly, it is not surprising that Sage Micro, with robust IC design capabilities accumulated through years of efforts, was able to win favor with investors. Not many IC design firms in China have built up extensive semiconductor IP as their American competitors normally do. Both its Silicon Valley based subsidiary and Taipei based technical support team kept Sage Micro's culture not isolated with the global semiconductor industry and market. As an expert in computer peripheral interface and storage controller chips, Sage Micro is among the very few Chinese firms that are able to expand internationally. It is only a matter of time before Sage Micro goes public on the Shanghai Stock Exchange's STAR Market. This may very well be the reason why investors suddenly became so interested and scrambled to pour funds into Sage Micro.
Sage Micro founder
Sage Micro CEO Dr Jerome Luo headed several research projects of large-scale communication systems and integrated circuit technologies in China and has received multiple awards from provincial and central governments for driving technology advances. He worked as a senior IC designer in Silicon Valley in 2001 and co-founded Baleen Systems Inc. in 2003. Dr. Luo returned to China in 2011 and established Sage Micro. Based on his successful experiences in leading research teams in China and decade-long overseas career, Dr. Luo is a seasoned veteran in IC design planning and the application specific integrated circuit (ASIC) industry. The fruits of the research projects he headed have commercialized into ten product lines that are in volume production. More than 30 papers have been published in domestic and international academic journals and more than 40 patents have been granted around the world. Dr. Luo is also enthusiastically devoted to pro bono work for the data storage industry. Not only does he serve as the director of Micro-Electronic Research Institute (MERI) in Hangzhou Dianzi University (HDU) but he is also one of the organizers of the renowned Flash Memory Summit (FMS). In the past six years, he invited more than 20 Chinese flash memory experts to speak at FMS and more than 10 international experts to present at local storage forums and academic events in China.
Sage Micro provides a comprehensive range of storage chip solutions, targeting cloud storage, personal storage and industrial applications.
Sage Micro CEO Dr Jerome Luo
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