Data storage chip maker Nanochip received $10 million in its third round of funding Tuesday, led by Intel Capital.
The company hopes to snag up to $15 million and has left open $5 million of funding to be provided by other interested investors. VC firm JK&B Capital participated with Intel in the $10 million and previously led Nanochip’s $20-million second round of funding back in March 2004.
Nanochip, based in Fremont, California, is developing high-capacity storage chips for the consumer electronics market. The chips use MEMS (micro-electro-mechanical systems) technology and are designed to have high bit densities so they can store tens of gigabytes of data on each chip.
That would enable Nanochip to fit a series of high-definition, feature-length videos on a single chip. Nanochip wants its chips to be removable and rewritable so they can work with future consumer electronics products that will require higher storage capacities than current storage media can provide.
Nanochip plans to use the funding to finance further advances in the technology and to help develop its first commercially available storage products. The company has been working for the past two years on the technology and claims its engineers have already cleared several hurdles.
Working with Intel
The company has applied for over 20 patents on the technology. That kind of edge could help Intel with its own efforts to develop higher-capacity chips using next-generation technology.
“Consumer applications such as digital photography, music, and video are opportunities where MEMS-based ultrahigh-capacity memory can deliver unique advantages over traditional memory devices,” said Keith Larson, director of the manufacturing, memory, and digital health sectors for Intel Capital, in a statement.
Nanochip CEO Gordon Knight said he looks forward to having his company work closely with Intel on developing the high-capacity storage chips.
Once the chips are ready, they will have to compete with NAND flash memory, on which Intel is already partnering with Micron in producing, in a venture called IM Flash Technologies, helping supply flash memory chips for the iPod nano (see Apple Plays $2.5B for Chips).
Apple Plays $2.5B for ChipsNAND flash memory is increasingly being used in MP3 players like the iPod nano and shuffle, as well as digital cameras and digital camcorders. Another competing technology is micro-sized hard disk drives.
The market for these technologies could be lucrative. Nanochip cites figures from the market research company, Semco Research, predicting that the market for NAND flash memory, including the high-capacity chips envisioned by Nanochip, will reach $36.1 billion in 2008.
memory, including the high-capacity chips envisioned by Nanochip, will reach $36.1 billion in 2008.
Mr. Knight declined to discuss the company’s relationship with Intel, as part of their agreement. He expects to use the financing exclusively for product development, and he expects that phase to last a couple of years.
The company will most likely need to use the next funding round to scale up production, but he does not yet know who the manufacturing partner will be and how much money will be needed. Nanochip is currently in talks with several foundries, however.
He sees the advantage of Nanochip’s technology to be in the way it doesn’t require conventional lithography technology in order to work.
“This technology isn’t bound by lithography,” said Mr. Knight. “Our density is defined by passing current into our media and making a change in the resistance in the media.”
He sees other chip makers steadily progressing from 90 to 65 nanometers and eventually to 45 and 32 nanometers, but he expects his company’s chips will be more in the 15-nanometer range.
The technology will be used for storing and downloading videos from the web, and the company is launching trials for digital cameras.