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Semiconductors - Friday, May 27, 2005

Quorum Systems - Profile

HQ: San Diego, CA

Founded: 2002

Management: President & CEO is Bernard Xavier, PhD. Bernard previously founded InnoCOMM Wireless, a Bluetooth and WLAN chipset developer in February 1998. In 2002, InnoCOMM was acquired by National Semiconductor for $130M.

Investors: In May 2005, the company raised $15M from Greylock Partners, Kleiner, Perkins, Caufield & Byers, and Enterprise Partners Venture Capital. The company has raised $24.35M to date.

Business Model: Quorum has demonstrated a dual radio integrated circuit that combines a W-CDMA 3G transceiver with Wi-Fi 802.11 b/g capabilities for cell-phone manufacturers for us in converged handsets. The semiconductor enables simultaneous voice and data operation and seamless hand-off.

Competitors: Agilent, Broadcom.

Dirt: This is an exciting market as Wi-fi is rapidly become pervasive but given the remaining spotty coverage of Wi-fi, it is no surprise that Quorum appears to be ahead of the pack. Cell phone users will be frustrated if they spend extra to buy a converged handset and than find they use the wi-fi channel infrequently. While a number of other chip makers have been able to make such dual circuits, Quorum claims its success will come thanks to a low cost design, under the projection that dual use handsets will not take off if they cost significantly more. Some market researchers believe dual-mode phones could break 100 million units by the end of this decade. The challenges for Quorum will be to help the market mature and to be certain that its chip resides in some significant portion of those 100 million phones.