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Friday, February 20, 2009
Vivace moves semiconductor biz from Beverly to China
By Efrain Viscarolasaga
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In the highly competitive semiconductor industry, setting up an office in China is nothing new — many of the manufacturing facilities and potential customers are located there. But to move an entire company 6,700 miles away is something different.
Nonetheless, that is the path taken by Vivace Semiconductor Inc. and its CEO, Cary Ussery.
Originally founded in Beverly in 2006, the maker of multimedia processors began a slow migration to China with its 2007 acquisition of Beijing-based component maker General Circuits Ltd. Shortly thereafter, Ussery moved to China full time, and since then Vivace’s employee base of 70 people has become more Asia-centric. Vivace still has about 15 engineers working in Rochester, N.Y., but its operations, management, and even servers are now located in Beijing.
Ussery cites several reasons for the move, though none related to the cost of labor. He still believes the bulk of chip design expertise lies in North America, but the expertise in analog circuits and the components that go along with Vivace’s chips are in China.
“It wasn’t about driving down engineering costs,” he said. “But as a semiconductor company today, you can’t just provide a chip. You need to provide a system that can be used out of the box, and a lot of that expertise is here (in China).”
Ussery also points to funding and support from the local and national Chinese governments that helped Vivace set up shop. He declined to say how much funding the company has received, but said, as an example, that it is in line for a new funding program that could bring the company $5 million to $10 million this year to help bring its products to market.
“Economic stimulus here doesn’t go into savings banks, but goes into helping specific industries,” he said. “There is really a drive to have companies grow here.”
Vivace has raised $10 million in venture capital and is backed by three Asian VC firms — Dragonvest Partners of Shanghai, Hotung Capital Management of Taiwan and China Renaissance Capital Investment of Hong Kong. However, the firm’s lead investor is Waltham’s Kodiak Venture Partners, and Kodiak founder and general partner Dave Furneaux sits on Vivace’s board.
The scenario, said Furneaux, makes management of his portfolio company challenging, but it was a move Vivace had to make.
“Venture capital is a local business, and it is a unique situation for us to be invested so far away,” he said. “Vivace simply needed to be in China given what they do and who they sell to.”
Ussery hasn’t completely abandoned his country of birth. He maintains that the design expertise remains higher in the U.S., and once Vivace begins generating revenue — its first product went to market last fall and the next generation is due at the end of this year — he may begin to build out his work force on U.S. shores.
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