DUBLIN, Ireland — Ireland's first incarnation as a Celtic Tiger successfully attracted Intel Corp. (Santa Clara, Calif.), amongst others, to set up manufacturing in Ireland. The second version of the green, white and orange striped tiger * instead of importing jobs * is looking to create them by encouraging entrepreneurs within a developing venture capital infrastructure - and to export the resulting products and services.

The country, comparatively small with a population of just 4.2 million people in April 2006, is growing fast and undergoing a transformation that is allowing it to punch well above its weight.

However, it was the move in the 1990s to set corporation tax at 10 or 12.5 percent, just about the lowest in Europe, that has driven the Irish boom.

In contrast Germany's effective corporate tax rate is 39 percent going down to 30 percent in 2008 and France's corporate tax rate is 33 percent with discussion of a move to 20 percent. The traditionally more entrepreneurial United Kingdom is beginning to look like a laggard with the announcement of a drop from 30 to 28 percent due to come in April 2008.

Although the Irish economy has been motoring since the early 1990s, 2001 marked a global recession which gave companies and countries a chance to review their positions. It was clear that Irish wages were catching up with elsewhere in the west and that Asia was positioning itself to grab an increasing share of the manufacturing investment pie.

The Industrial Development Agency (IDA Ireland), which sought to attract inwards investors with subsidies and tax breaks, had been a key government agency in the 1980s and 1990s. But the changing emphasis coincided with the creation of the Enterprise Ireland government agency, which provides multifaceted networking and training support as well as venture capital and R&D grants to entrepreneurs.

Although biochemistry, pharmaceuticals, software and nanotechnology are high on the agenda, electronics remains a core sector, according to Sally Young, a development advisor in the high-performance startups business unit.

"In 2001 the balance began to shift, said Young. It is also notable that in 2005 Frank Bryan, who had been instrumental at the IDA in attracting Intel, joined Enterprise Ireland as its CEO. "He helped set targets for us, just like in the private sector. And he got us to focus on business models rather than on technology sectors. We look for clients with the right model, the ability to scale and the propensity for growth, said Young.

This marks out companies with 10 people where 70 percent of sales are for export, with the chance to grow to € 5 million (about $7.5 million) revenue within five years and market prospects to go onto € 20 million (about $30 million) revenue. "We like companies that want to perform R&D in Ireland and want to grow and acquire other companies, said Young.

As such Silicon & Software Systems Ltd. should make an ideal client for Enterprise Ireland.

S3 (Dublin, Ireland) is a software developer, IC design house and IP licensor with more than 300 employees and engineering teams in Dublin, Cork, Poland and the Czech Republic. It began in 1986 as a design subsidiary of what was then Philips Semiconductors, now NXP, set up specifically to tap into the engineers graduating in Ireland who were reluctant to relocate to Eindhoven.

So with a 20-year history behind it S3 hit the ground running as a "startup in January 2006 after ACT Venture Capital made a €10 million investment. This was subsequently backed up with €2 million (about $3 million) investment from Enterprise Ireland.

True to Young's ideal S3 has acquired Acacia Semiconductor SA (Lisbon, Portugal), a developer of data conversion intellectual property. S3 hasn't disclosed how much was paid to make Acacia S3's third overseas design center.

John O'Brien, chief executive officer of S3 made the point that the money that has come into S3 is being used specifically to drive a transition from a design services business model to a more scalable licensable intellectual property product model.

"In 2007 we'll do about 80:20 services to products. But in the silicon business it's more like 70:30 and we expect it to be 50:50 in 2008, O'Brien said.

However, encouraging as that progress may be for S3, not everyone is enamored of the IP business model, painfully aware that an IP supplier only captures a fraction of the chip value and, unless you are an ARM or similar heavyweight it's hard to make a royalty model stick, which limits the scaling possibilities.

Duolog Technologies Ltd. (Dublin, Ireland) was founded in 1999 by Ray Bulger, formerly CEO of S3. No surprise then that Bulger formed Duolog as a provider of 802.11 wireless LAN intellectual property and design services, with offices in Dublin, Galway, and Budapest, Hungary.

Duolog has grown to about 130 staff and has developed both design services and IP business models however it has found resistance to royalties and achieved its greatest success with licensing verification and validation tools that automate the insertion of IP blocks into system-chips. Bulger announced recently that the company has flipped to an EDA software business model.

Bulger said he believes that it is important that Duolog continues to develop leading-edge designs to maintain its familiarity with design pain points. "That's why I am keeping my design services operation in Hungary. They are working on 65-nm and just starting 45-nm. Second and third wave

Like some other regions of Europe, Ireland is starting to benefit from second and third waves of experience in electronics. In Ireland's case this is well exemplified by Brian Long, an electronic engineering graduate of Trinity College, Dublin.

Long founded Parthus Technologies, a developer and licensor of communications platforms, in 1993 and served as its CEO until 2002 when the company was merged with the digital signal processing division of DSP Group to form Ceva Inc. Prior to founding Parthus Long had served as chief design engineer with AT&T and later held responsibility for mixed-signal technology developments at Digital Equipment Corp. Long is now a partner at Atlantic Bridge Partners.

It's a classic progress of an engineer who after making money for someone else chose to do it for themselves. Then, having made the money, the engineer becomes the high net worth individual who can guide investment in a new generation of budding entrepreneurs.

Among those benefiting from Atlantic Bridge's money and Enterprise Ireland's fostering care are GloNav Inc.which is developing global positioning by satellite baseband and RF chips. It is notable that GloNav has chosen a fabless chip company business model.

Although operationally headquartered in Newport Beach, California, GloNav has its legal and financial headquarters in Dublin. It was formed by the spinout of Ceva's global positioning system (GPS) business and the acquisition of RFDomus Inc. enabled by $16.2 million of capital from Atlantic Bridge. As a result it has engineering teams in Daventry, England, Dublin and Newport Beach, California.

Another example of the second wave is Peter Smyth, founder and CEO of RedMere Technology Ltd., who was formerly a vice president for wireless communications business development at Ceva and before that at Parthus.

RedMere is offering chips for high-definition multimedia interface (HDMI) which can support multigigabit per second wireline communications. Smyth has also insisted his company follow a chip product business plan, rather than an IP model, even if it costs more money upfront. The company has raised about $19 million since its founding in 2004 and it has its first chips out. "The bulk of our funding has come from North America, although Canadian VC Celtic House does have a Welsh connection. Our investors understand that it takes up to $40 million of investment.

Gradually the pieces are coming into place to support multiple examples of such companies. There is an Irish Venture Capital Association able to umbrella a number of multinational and indigenous VC companies and chart and foster investment progress and the Tyndall National Institute has been created in Cork to perform applied research in the gap between university and commercial research.

Irish technology companies raised €62.6 million (about $92 million) in the first half of 2007 according to the IVCA Techpulse survey. This compares to €83.7 million (about $123 million) in the same period in 2006.

"Many of the major VC companies have been in fund raising mode during 2007 but despite this our survey suggests that there is plenty of funding still going on, commented Regina Breheny, Director General of the IVCA, in a statement.

The number of Irish companies raising funds has increased from 19 in the first half of 2006 to 31 this year. "Despite the overall reduction in deal value, the year to date has seen a highly active VC market with a wide variety of tech sectors being supported, added Breheny.

Funds were supplied by 12 Irish VC companies and 13 international. This compares to nine Irish and 13 international last year. "It is good to see Irish VC firms remain active in the market and also that the Irish tech sector continues to attract the interest of overseas players, added Regina Breheny. "A buoyant venture capital market is a central plank in helping to create a knowledge-based economy and reduce our over dependence on property.

Tyndall Institute * the missing link in Ireland's renaissance?

The Tyndall National Institute, established in 2004 in Cork is Ireland's largest information and communications technology research center. It is now set to create 170 additional research positions as a result of a €50 million (about $75 million) expansion program announced in June.

Tyndall has a current employment level of 330 researchers, including almost 100 PhD students and the investment is set to create a laboratory building and upgrade the existing infrastructure. The money is expected to allow Tyndall to increase researcher numbers to 500 within the next four years, at which point Tyndall will be generating over €40 million of research income annually.

Tyndall undertakes collaborative research and related work with Intel, Analog Devices and Hewlett Packard, amongst others, as well as providing support to Irish high-tech companies.

Current research is focused on photonics, micro- and nanoelectronics and microsystems, and includes photonic and electronic materials, nanoscience and nanotechnology, device modeling, design, processing, fabrication, testing and packaging, optical, electronic and biological subsystems and systems for photonic networks.

This story appeared in the EE Times Europe print edition covering November 19 - December 9 2007. European residents who wish to receive regular copies of EE Times Europe, subscribe here.

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