Creativity is often trumped by conformity in Taiwan, a rule of thumb that has largely guided its businesses down the path of copy-cat products that are lower-risk, but also lower-margin.
A few companies are itching to break that stereotype. One of them may turn out to be Faraday Technology Corp. The Hsinchu-based ASIC design services and intellectual-property provider took the wraps off a new strategy last month that better wields its unique advantage as an ARM architecture licensee. Armed with its new focus, Faraday is ready to challenge the likes of the PowerPC and MIPS architectures in high-performance applications.
Faraday intends to pursue high-profile, high-margin clients, such as Cisco Systems, Nortel Networks, Juniper and Siemens. It's tempting to dismiss the goal as fancy. Faraday is a relatively small company, with $111 million in revenue last year, and its competition is well-established and heavily muscled-LSI Logic, Motorola, IBM and NEC, among others.
Still, Faraday is one of only three companies worldwide with a license to make extensions to the ARM architecture. In 2002, Faraday crafted its own version of the ARM7 and persuaded ARM to grant it a limited license to make it.
But the impact has been "soft," said Charlie Cheng, president of Faraday Technology USA. That's because Faraday originally pitched itself as the low-cost version of ARM, a strategy that didn't get much traction in the marketplace. So now it is reversing course.
"This is all about performance; sky's the limit," Cheng said. "We are going to get as aggressive as anyone else in the market-MIPS and PowerPC-and still provide the familiarity and popularity of ARM."
For its opening shot in this strategy, Faraday is promoting a 500-MHz ARM-compatible processor with a souped-up 64-bit switch fabric that replaces a standard Amba bus.
Faraday seems to have learned quickly that it doesn't make sense to compete head-on with ARM in a low-margin, high-volume business. Yet it still casts an envious eye toward ARM's position.
Faraday may one day return to high-volume markets. Cheng, however, is careful not to say so directly, since it may put the company in more-direct competition with ARM's mainstream markets. But by then, Faraday may be ready for it.
Taiwan bureau chief Mike Clendenin can be reached at mclenden@cmp.com.
