New models for building scale in the electronics industry

Tech entrepreneurs Nigel Toon and James Collier had much advice for the electronics industry at the NMI Industry Summit in London in November 2011, particularly about building scale and using new business models to overcome current limitations to growth for the semiconductor start-up and entrepreneur community. In particular they talked about how semiconductors are not seen as good investments any more, and a future for semiconductors in which the silicon is free and is merely a vehicle to generate long term revenue via a web portal.

Two very different but complementary views emerged as the two spoke at the annual NMI industry summit. The event started with a delivery by Mark Prisk MP, who underlined the hidden success story of the UK electronics sector, and how the UK government was working towards making the UK’s tax system the best in the G20.

Mr. Prisk also emphasised how the government was working as an effective partner for the electronics industry with an industry-lead strategy. “We need to be more like the French”, he said, referring to the fact that in France, ministers don’t just turn up for a launch or ribbon-cutting ceremony, but they build up a relationship with that industry and understand it in the lead-up to the launch.The CEO of the NMI suggested that the current UK government and minister understood the challenges of the electronics and industry better.

Nigel Toon, CEO of picoChip, talked about the reality of building scale for a tech start-up: he said there’s no right answer. It’s down to having a few smart people who can solve problems others can’t see.“Successful tech companies recognise the smart people”.

James Collier, CEO of white space radio start-up Neul echoed those of Nigel Toon with regard to funding. “Semiconductor companies are not considered good investments any more; it’s difficult to get funding as a fabless start-up.”He did suggest that companies like Icera were only mildly successful, and that the valuations of companies like CSR and Wolfson were not particularly good (though they are only marginally profitable). “Consolidation is happening [in the industry],” he said.

For the complete article, originally published in The Chilli, click here.