Silicon Systems, the Irish silicon chip design house which opens a new plant in Cork today, is seeking acquisitions - initially in the US. The move is part of a series of changes at the company following a dramatic alteration in its business model in the last year.
It is understood the company, which is now the largest independent design centre in Europe - with more than 200 engineers - has hired US investment bank, Broadview Associates to seek suitable candidates for acquisition.
SSL, which is on target for revenues this year of $28 million (€26.7 million), is prepared to bid for a company of similar size to itself. SSL has been profitable since it started operations in 1993.
SSL has long been tipped for a stock market flotation, and although it is a long-term management consideration there are no immediate plans. Last year Goldman Sachs took a 23 per cent stake in the company for an undisclosed sum.
SSL recently decided to change its business model which supplies chip design services to technology companies. According to chief operations officer, Mr Kevin Fielding, the company saw better opportunities to grow its revenue scale by licensing the intellectual property embodied in its chips to multiple clients, instead of being tied in to exclusive arrangements.
"If we were to continue as a design services company our worth would only be three to four times revenues. If we pursue the intellectual property business we would be valued at about 20 times revenues," says Mr Fielding.
By focusing its business on intellectual property licensing, SSL will now compete with Rambus, MIPS and industry giant ARM - whose $5 billion value stands at around 40 times revenues.
SSL is recording year-on-year growth of 50 per cent, and following the shift in the business mix it expects to quadruple profits next year.
SSL has just developed a chip which complies with the new wireless protocol Blue Tooth standard endorsed by Nokia, Ericsson, Intel, IBM and Toshiba. It is one of only four companies worldwide to have developed technology which would allow remote communication between a vast number of devices within a local range. For example, a mobile phone could be operated as a television remote control, or a transaction payment device.
It is understood SSL will make a number of announcements shortly about licensing agreements it has forged with a number of household names in the telecommunications and computer peripherals industries.
SSL has also developed leading MP3 technology, which will be featured at the US computing exhibition, Comdex, this month. MP3 is one of the fastest growing Internet phenomenons as it allows users download their favourite music to MP3 players at little or no cost.
SSL's chip will be featured in a new MP3 player, designed by Essette.com, which can also double as a cassette, and will deliver MP3 quality sound through traditional car and home cassette players.
