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Altair Semiconductor raises another $25M in its quest to make dirt cheap LTE chips

Above: Verizon's budget Ellipsis tablet is powered by Altair's cheap LTE chip.

Image Credit: Verizon
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Investors are betting even more money on LTE-only chips.

Israeli LTE chip firm Altair Semiconductor has raised a fresh $25 million, led by new investor Jerusalem Global Ventures, the company told VentureBeat. The round, which closed in March, brings Altair’s total funding to more than $125 million.

The company’s big focus has been on LTE-only chipsets. By eschewing legacy 3G connectivity, Altair is able to make LTE chips that are significantly cheaper than the competition.

How much cheaper? Altair was able to offer Verizon LTE chips for its inexpensive Ellipsis Android tablets for just $30, while Qualcomm chips would have been closer to the $80 to $90 range, cofounder Eran Eshed tells me. Those cheap LTE chips allow Verizon to offer the Ellipsis for free with a two-year data contract, or $250 at full price.

Altair is hoping to follow in the footsteps of Atheros, which bet its business entirely on Wi-Fi chips more than a decade ago, long before Wi-Fi became almost a standard feature in gadgets. Qualcomm scooped up Atheros for $3.1 billion a few years ago to get into the Wi-Fi chip market.

“I’m sure that if we can take the cost down to Wi-Fi [chip] levels, that’s a serious disruption,” Eshed said. “We’ll see this market take off to the point that it would make sense to integrate this hardware into devices even if a certain percentage don’t get activated.”

Eshed couldn’t say how much cheaper Altair is aiming to make its chips, but he hinted that it will be “significantly” less than the $30 price of its current products.

While most cities are decently covered in 4G LTE networks today, it will be some time until 4G reaches the expansive coverage of older 3G and 2G networks. So, not surprisingly, Eran thinks it will be a few years until Altair’s chips will be suitable for smartphones. But for now, the company’s technology is ideal for things like tablets and laptops.

Eshed estimates Altair currently holds around 80 percent of the LTE-only chipset market. The company’s revenues have also grown significantly over the past few quarters, and Eshed says it’s planning to go public next year.

He’s also not too worried about the competition at this point: “There are no new players coming into this market, it’s too late,” Eshed said. “The big guys are all focused on trying to establish position on phones, it pays the bills. … Even big, capable funded companies failed in this space.”

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