Ziptronix builds up with $1.8M traunche

Dow Jones VentureWire
02.02.09

Ziptronix builds up with $1.8M traunche

Ziptronix Inc., a developer of technology to bond semiconductors vertically, has secured the second tranche of its Series 1 recapitalization as it senses opportunity in struggling equipment makers.

The $1.8 million tranche brings the round's total to $4.1 million. Intersouth Partners and RTI International led the round with participation from NC Idea, according to Dan Donabedian, the company's chief executive. He declined to disclose the company's valuation.

Ziptronix licenses technology that uses silicon oxide to bond semiconductors so they can be stacked vertically. The company was spun out of RTI International, a North Carolina research institute, in 2000, but that was a little early for the company's technology to take hold, Donabedian said.

"3-D semiconductors have become an 'in' thing, but back a few years ago we had to evangelize a bit more," said Katrin Burt with Intersouth Partners, which has been an investor in the company since 2003, when it participated in a $17 million Series B round. But now it is getting harder to shrink chips horizontally and there is "an ever-increasing consumer demand for electronics with a smaller form-factor," leaving more chip makers to build up, rather than across, to save space on a device.

Ziptronix sees the most demand for its technology in image sensors, especially those used in the screens and cameras on cellphones, which should help the company through the recession because the 25-and-under crowd that make up most of the market for those devices only spend on the best equipment, regardless of the economic outlook, Donabedian said.

The company also sees opportunities in other types of image sensors such as those used in defense applications and medical imaging, Donabedian added.

Other start-ups developing technology for 3-D integrated circuits include Tezzaron Semiconductor Inc., ZyCube Co. Ltd. and venture-backed Cubic Wafer Inc., whose backers include Envest Holdings, EuclidSR and William Blair Capital Partners.

Compared with the techniques of competitors, which use copper thermal compression or some type of adhesive, Ziptronix's methods don't require a semiconductor manufacturer to purchase any new equipment, Donabedian said.

This could prove to be an especially potent advantage in the current climate, where capital spending on new equipment has ground to a halt, with equipment companies such as KLA-Tencor Corp. and Lam Research Corp. last week announcing more than 30% drops in revenue from quarter to quarter.

Companies using Ziptronix's technology currently have products in development, with wider production expected sometime this year. The proceeds of the new financing tranche will be used to land more customers, Donabedian said.

Prior to the recap in March, Ziptronix had raised more than $30 million from investors such as Alliance Technology Ventures, Grotech Ventures and Research Triangle Ventures.

The company has 17 employees, most of whom are engineers, Donabedian said.