VentureBeat

The security sector has been hot since 9/11. It’s sexy enough so that companies in the normally out-of-favor chip sector can get funding – as long as they are focused on making security chips.

Sunnyvale-based Stretch is announcing today that it has taken a tranche of $15 million from its second round of venture capital from Worldview Technology Partners, Oak Investment Partners, and Menlo Ventures. That brings the total raised since 2002 to $100 million.

Craig Lytle, CEO of Stretch, says the company is using the money to expand as it rolls out new versions of its chips. The chips are a hybrid of a RISC microprocessor and an FPGA, or field programmable gate array. The microprocessor gives the chip its fast performance and the FPGA makes it flexible.

Stretch has tailored the software around the chip and the system so that it can be used in surveillance cameras. Its chips thus sit alongside image processors made by Pixim, a Mountain View, Calif., company that also added $5 million (our coverage) to its second-round funding recently. Beyond surveillance chips, the Stretch chips can be used in a variety of markets where low-cost, high-performance and programmability is important. Other customers include those in wireless, broadcast and machine vision industries.

The company has 60 employees and began shipping its first chips in 2005. It shipped a second-generation chip in October and is now planning a third generation. Surveillance chips are going into security cameras that are increasingly sophisticated. And those cameras are being used in places like London, where there is roughly one camera for every six people, and China, which is beefing up security for the Beijing Olympics. Las Vegas casinos are also heavy users, Lytle said.

These cameras now have high-quality H.264 video where you can discern faces in the images. Stretch’s chips take the analog video and compress it into a form that can be stored and transmitted more easily. It competes with digital signal processors produced by Texas Instruments and others. Lytle said his company can make its chips for as little as quarter of its rivals.

Customers include surveillance camera makers who put the chips into new Internet-based cameras or digital video recorders that store security video. The surveillance camera market is expected to grow from $4.9 billion in 2006 to $9 billion in 2011, according to market researcher iSuppli. Surveillance camera chips themselves are expected to more than double to $1.25 billion in 2011.

The company was founded in 2002 by Albert Wang, who formerly served as chief scientist at both Synopsys and Tensilica. Stretch has licensed processor technology and tools from Tensilica.

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Tags: co: menlo ventures, co: pixim, co:stretch, inv: oak investment partners, inv: worldview technology partners