Private subsidiary in the works

CMC Microsystems has reached deep from within the microelectronics sector and selected Dr Ian McWalter as its new president and CEO, indicating a move towards increased commercialization as it continues implementation of its 2004 strategic plan. CMC's vision for the future of microsystems has evolved since the release of the strategy and now includes the creation of a private subsidiary to deliver its suite of research and technology development and training services to emerging microsystems-based firms.

McWalter is perhaps best known for his long involvement with Gennum Corp, Burlington ON, where he held several senior positions over a 15-year span including more than five years as its president and CEO. More recently, he was CEO of London UK-based Toumaz Technology Ltd — a spin-off from his alma mater (Imperial College) — exploiting ultra-low power silicon applications aimed at the life sciences sector.

"I've known (company founder) Chris Toumazou since the late 1980s at Nortel," says McWalter. "They wanted me to help define their market segments, get a chip that worked and get customer traction in key market areas. I did all three and reached a breakpoint in what I intended to do … Canada is a more attractive option and CMC was a very attractive opportunity."

McWalter says leading Queen's Univ-based CMC over the next several years represents a natural progression as well as a different role of working with a not-for-profit corporation. He replaces interim CMC head Dr Jim Roche, co-founder and former president and CEO of Tundra Semiconductor Corp, who stepped in and led the executive search committee to replace Dr Brian Barge (R$, November 27/06).

Perhaps as important as his industry experience — which included leading the silicon R&D group at Bell Northern Research (now Nortel) — is McWalter's long involvement with CMC dating back to the its inception in 1984. While serving as chair of the CMC board of directors, he worked closely with Barge and others to formulate the current strategy, which he will now have the responsibility of implementing further.

"We need to take the next integration step beyond silicon into new sectors like life sciences, the environment and energy. Life sciences in particular represents a huge opportunity," says McWalter. "Canada has pockets of excellence in microsystems but it's never been a major sector … There's an opportunity to be a larger player through life sciences, which is a fertile field for new applications and new companies. There's a chance for Canada to lead."

As originally conceived, CMC's strategic plan required several major funding sources to be fully implemented. But to date only the Natural Sciences and Engineering Research Council (NSERC) has come through, renewing and increasing its long-standing support with $48 million over five years beginning in 2005. Funding for a long-proposed Microsystems Partners Network (MPN) did not materialize and CMC is hoping that its new private subsidiary will perform many of its intended functions.

separate academic & industry functions

The MPN called for approximately $70 million in public funding but despite strong regional and national interest by government and non-government players, the concept was never fully developed. Several factors influenced the decision to abandon the MPN in favour of a private subsidiary, the most significant being the need to separate CMC's academic work with its intention to move forcefully into the realm of the private sector. The departure of Barge last year also created a situation where CMC officials were reluctant to launch a major new initiative before the recruitment of a permanent president.

"MPN took a complex, organizational approach of a significant scale that included a number of projects which would have generated new and additional financing … But engaging companies involves a very different business-to-business approach and we felt that could be firewall issues," says Dan Gale, CMC's VP and chief technology officer. "By creating the separate-but-connected organization, it's much clearer on the relationship and differences between the two client bases."

Like CMC's current engagement with academic researchers, the private subsidiary will deliver a detailed level of technical expertise to companies, as well as providing marketing and commercialization services so that firms can add value through prototype development. McWalter says it will initially be based at CMC's Kingston headquarters but could move if it can service its projected customer base elsewhere.

"We would work at the wholesale level and life sciences would be the principal applications area," he says.

Still undetermined is what shape the subsidiary will take, with options ranging from bootstrapping the operation using revenue from a slowly expanding client base to a full-blown operation requiring additional public funding.

"If it's a fully private entity, its life expectancy is only as good as its client base . But there's lots of freedom as we build the company client by client," says Gale. "On the other end of the spectrum, we're back to many of the attributes of the MPN such as the financing of early ventures."

While the MPN was being considered, Industry Canada struck a commercialization task force to examine the Canadian environment and make recommendations on the most effective mechanisms for accelerating business creation and growth (R$, April 28/06). Then there was a change of government which resulted in a different approach to commercialization. In the last Budget, two new programs emerged — the Centres of Excellence for Commercialization and Research and the Business-led Networks of Centres of Excellence (R$, March 26/07).

"MPN was superseded by policy being translated into new instruments," says Gale. "There's a possibility some of these new centres could be created that are connected to microelectronics … We expect some will be proposed that could have similar business relationships as MPN."

The 2004 CMC strategic plan also included $70 million in new funding from Industry Canada for a pre-competitive microsystems R&D program, which has also not been secured. McWalter says that if that component of the plan is revived it will return in a much more commercially oriented form.

"I would like to do more to bring universities, government and industry together, It's difficult to do but in terms of the economy they all need to have an aligned goal," he says. "As a fourth pillar organization, CMC is one of the strongest sources of alignment in this area."

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