French government start-up seals $300M deal with Russian government fund

Crocus Technology, a spin out from the French Atomic Energy Commission’s Electronics and Information Technology Laboratory (CEA-Leti), in Grenoble, is entering into the big league of the semiconductor industry with a $300 million funding package to manufacture next-generation semiconductors at a new foundry to be built in Russia.

The deal is backed by Rusnano, a nanotech investment fund that is 100 per cent owned by the Russian government. It will initially invest $125 million for the construction of the Crocus Nano Electronics facility, with an additional $120 million to be deployed in subsequent years to increase the production capacity of the plant.

The investment is a sign of the Russian government’s intent to translate emerging nanotechnologies into a major industrial sector. The deal with Crocus follows its investment in the Cambridge University spin out Plastic Electronics, announced in January. In this case Rusnano invested $150 million as part of a total $700 million package to build a plant in Zelenograd, Russia, to manufacture plastic electronic displays.

Since its formation in 2007, Rusnano has committed $5.9 billion to 110 projects.

The Crocus facility, which is due to be operational within the next two years, will manufacture magnetoresistive random access memories (MRAM), which rely on magnetism to store data. Since it was set up in 2006, Crocus has raised €28 million, mainly from European venture capitalists, including the Swiss firm Nanodimension and France’s Sofinnova, to move its technology from laboratory to market.

The company also established a subsidiary in Silicon Valley, enabling it to build relationships with influential information technology companies in California and to recruit first class management, landing Bertrand Cambou, a former vice president at Advanced Micro Device (AMD) and at Motorola, as CEO.

It is a rare achievement for a European company to raise the finance to set up its own chip foundry. The handful of home-grown European semiconductor makers rent production lines in Asia.

The existing investors CDC Innovation, Ventech, IDInvest Partners, NanoDimension, and Sofinnova Ventures are not exiting Crocus. Rather, they are all taking part in a $55 million capital increase to keep their share undiluted. This cash injection will be used by Crocus to finance its 49 per cent stake in the joint venture in Russia. Crocus has also agreed to invest $5 million into related Russian research organisations.

The Russian facility will be the first dedicated magnetic memory wafer fab in the world capable of high volume manufacturing of MRAM devices.

According Cambou, the logic of this deal is to be found in Russia’s determination to use the huge proceeds from its oil and gas exports to rebuild the country’s industrial base. Headed by the former Russian privatisation czar Anatoly Chubais, Rusnano is investing mainly in early stage projects. “Instead of going for current technology, their interest is in disruptive ones like ours,” Cambou told Science Business.

Magnetic storage offers several advantages, most notably lower power requirements. Cambou says this and other improvements over traditional random access memory chips will give Crocus a competitive edge. “[We will] not target the commoditised memory market, but aims for application areas where low power [is a significant advantage] such as in [mobile phone] sim cards, near-field communications chips, smartcards, network processing and biometric authentication.”