Q: With a shared vision of taking technology innovation in wireless communications to the next level, CSR and SiRF Technology recently merged. How do CSR and SiRF Technology complement each other, and what exciting user experiences can consumers expect from the combined company's revolutionary solutions?

A: For the past year, CSR has been focused on our Connectivity Centre. The Connectivity Centre is a combination of short-range wireless technologies such as Bluetooth, FM radio (both receive and transmit), Wi-Fi, Global Positioning System (GPS), audio playback capabilities, Near Field Communications (NFC) and mobile television. Today, there is an increasing need for the combination of these technologies, especially in the fast-growing markets of smart phones, feature phones, netbooks and smartbooks. The convergence of these capabilities is the differentiating factor between consumer electronics providers, and CSR has been focused on providing this benefit to customers.

The merger between CSR and SiRF Technology gave us the opportunity to directly respond to what our customers demand in markets such as cell phones, PCs and gaming. Although CSR had a play in the location sector, it was relatively small; so we jumped at the chance to merge with SiRF who was the leader in location and Global Navigation Satellite Systems (GNSS) technologies such as GPS. The chance to combine our strength in Bluetooth and FM radio with SiRF's leading-edge location technology was too good to be true. As a result of the merger, we are now able to combine leading-edge location and short-range wireless technologies in a range of products.

Consumers can expect enhanced location solutions from our new technology. Today, location technology is only used in personal navigation devices in the car, but there can be many more benefits if you make devices location-aware. It's almost as if the Internet is being rebuilt with one new dimension—location. For example, taking pictures with mobile phones is quite popular; and with our new technology, people will now know where they took the picture. Social networking also becomes much more useful when you have a location-aware search. If you're looking for a pizza shop on Google or Bing, it's very helpful to know where you are so you can be more targeted with your search.

Q: Refuting those who believe there is a lack of innovation in the industry, CSR is a company that has continued to introduce groundbreaking connectivity and location solutions to its customers in recent months. Tell us about some of CSR's new solutions and what major evolving consumer preferences and opportunities in the mobile market initiated the need for these solutions.

A: There are multiple consumer preferences that influence CSR's solutions, but the main one is the location element. As I previously mentioned, location is much more than simply navigation. Location awareness in many devices, such as cell phones, digital cameras and cars, is going to be much more important in future. CSR is currently working on ensuring that consumers are always location-aware. Our new technology's power consumption is so low that there is always-on location awareness, eliminating the need to switch a device on or off. As well, we are working very hard to make sure our GPS technology works in places that don't have access to satellites. For instance, location-based devices have no function when they do not work in a shopping mall. So our low power and deep indoor location capability are two features consumers can expect from CSR. We are already implementing this technology in our recently launched Atlas IV and SiRFstarIV products.

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Q: Today, many start-ups focus on developing incremental solutions with the intention of being acquired rather than creating breakthrough solutions. Do you feel these start-ups will be successful in today’s industry? With Amalfi now in its expansion stage, what is your vision for the company over the next decade?

A: Incremental solutions and start-ups don’t work well together, as potential customers will not take a chance on an unproven start-up unless there is tremendous value provided by the new technology. Successful start-ups will continue to be those companies providing breakthrough technologies today and into the future.

We strongly believe that CMOS technology will eventually dominate the power amplifier space for handsets as it has done many times before in other high-volume consumer applications. Historically, once CMOS outperforms the competition, the industry landscape quickly changes. As CMOS wins, we expect Amalfi to maintain its technology leadership and become a dominant supplier in this space. We offer superior performing products relative to the strongest non-CMOS competitors, and our customers enjoy bill of materials (BOM) savings by adopting our devices. Amalfi’s long-term vision is to provide innovative solutions to a broad customer base in many complementary wireless and radio frequency (RF) industries, growing over time into a very large, highly profitable mixed-signal company.

Q: According to a BDO Stoy Hayward survey, the number of technology, media and telecom companies that feel they have enough access to funding for their business to effectively operate has significantly decreased by half compared to last year, forcing many start-ups to shut down. In contrast, Amalfi recently completed a $24 million round of funding (the largest amount raised by a fabless company thus far this year), confirming that there are still a select number of privately funded companies thriving. What qualities must an emerging company, such as Amalfi, possess to secure funding during an economic downturn? Do you see venture capital activity in the semiconductor industry improving anytime soon or must a new model be adopted?

A: I’m surprised that the number of companies that feel they do not have adequate access to funding decreased by only 50 percent. I would have predicted it to be much higher. Everyone I speak with complains that the lack of funding will have a huge impact on their overall business plan. There are some companies significantly slowing down product development by slashing research and development (R&D) spending, hindering their chances to become an eventual market leader. And others are now heading down an acquisition path at an inopportune time with the promise of yielding very poor financial returns.

Start-ups must meet several difficult criteria to successfully secure outside funding. First, they must be developing breakthrough technology with the opportunity to become the dominant supplier in a very large, established industry (e.g., Amalfi in the cellular handset market). Second, customers must verify that the technology will win significant market share (i.e., must be shipping product to industry leaders). Third, the funding must be utilized to grow the company, providing capital to scale the business. It should not be used to prove the viability of the offering. Fourth, key members of the team must have past experience in successfully building businesses and taking companies public, and have a clear vision of how to do it again. Finally, the investors themselves must be confident to go against the grain and invest in a space that is not as sleek and sexy as many others in this environment, betting against a great deal of macro information to know which companies will beat the odds and become tomorrow’s winners. These semiconductor winners will provide tremendous returns to these savvy venture capitalists who bet against the pack.

Venture capital activity will not improve quickly. Series A investments will take place, but not in great numbers. Series B investments will become more difficult, even from today’s benchmark, as investors will increasingly choose not to take that risk. Series C and later stage funding rounds will dominate due to the reasons previously listed. In today’s $250 billion industry, new players will emerge over time, but the bar is definitely going to be set much higher.

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