Discera Confidential 1

MEMS Opportunities and ChallengesTom Willey

October 6th 2010

Agenda• Introduction TW-Partners

• Discera – MEMS• Market dynamics• What was involved in building MEMS product• What happened

• Investment – MEMS• Today• What’s needed

TW - Partners• Founded in 2008 by Tom Willey & Mark Konopacky• Business Development Services

• HQ in Silicon Valley• Locations in Tokyo, Cambridge & Seoul

• Broad Management & Partner Core Competence• Strategy, Sales, Marketing, Finance, Funding

• Broad Market Segment Expertise.

• Extensive Global Client Business Development.

Electronic Heartbeat - Quartz• Every electronic device

contains an oscillator• Electronic heartbeat

• Quartz crystal is dominant

• $3.5B – 10B units• 15% growth

• 100 year old technology• Very mature life cycle• Difficult to innovate• Low margin

Tomorrow’s Electronic Heartbeat - Si• Large existing market• No market risk• Extremely attractive to

venture backed start-ups• Silicon knocking on the door• Lots of players stepping up

with Si solutions• Definite exits·M&A· IPO possible

• Discera – Core Value• MEMS-based oscillator• 60% GM, with ASP less than

Quartz manufacturing cost

1) Resonator

3) Resonator + ASIC 4) Packaged Oscillator 5mm x 3.2mm

2) Packaged Resonator

Building a MEMS Oscillator – Easy?

Resonator• First Silicon ≈ 1996• Univ Michigan internal Fab

• Discera Funded – 2001• Technology spin-out• Resonator “ready for

productization”• Productization - 2008• Multiple major revisions• 2 MEMS fabs• Many Issues·Multiple experimental split lots to solve·Difficult to predict cause and effect·Lots of “black magic”

Resonator

ASIC, Package & System• ASIC• Design process well

understood• Fab – design kits• Good design tools

• Packaging design• Simple plastic – low cost• Main Issues – Stress·Multiple experimental split lots to solve

• System• Difficult to predict cause

and effect• Lots of “black magic”

Today• 2010 - Discera is now shipping in volume and

gaining market penetration• Future looks promising for Discera MEMS solutions

in the clock timing market

• But• 9 years - $60M++ to get there• Allowed competition to gain foothold• SiTime entered the market 2005 using Bosch technology·Large venture investment·Used Bosch MEMS technology·Now possibly ahead of Discera

RESONATOR & PACKAGE• Design & simulation

“Designing is an art”• Lots of experiments• Virtually no re-use

• Almost no design tools• Device, system, package

• Fabs look like a sandbox to the artist• No design kits

• Similar to the Industry in the 70’s

ASIC• Multiple Chip Designs• Worked as expected·On Time·On Spec·On Budget

• Used two different fabs• Designs were

transportable and reusable• Relatively few issues• Design rules• Good tools

Why did it take so long & cost so much?

Venture Investment in Semiconductor• ROI• Most Si companies need ≈ $60M - $80M in to get an exit• Very few exits see $60M-$80M• Almost no exits > $100M• For VC’s - not likely to even get their money back• RESULT: Almost impossible to get new investment in Silicon

• Acquirers – Major Si Companies• Fewer companies getting funded means less innovation• Bad for industry outlook

• Need to get Venture ROI back on track·Risk minimization·Capital efficiency - < $10M-$20M total investment

MEMS Innovation• No shortage of MEMS opportunities/ideas

• To become real• Companies have to be funded· Investors want higher capital efficiency and % of success–Devices have to work 1st time

• MEMS design/development ecosystem requires drastic improvement• Designers• Semi Fabs• EDA tools companies