Lockheed Martin Takes Stake in Chip Designer
December 15 2016 - 12:04PM
Dow Jones News
By Doug Cameron
Lockheed Martin Corp. is investing in a chip designer and
targeting military communications and technology for the next
generation of cellphones as part of the revamp of its venture
capital arm.
The world's largest weapons maker by sales is expanding ties
with commercial technology companies as Pentagon officials become
more optimistic that their own outreach to Silicon Valley will
continue under the incoming administration.
Lockheed has acquired a minority stake in San Diego-based
IQ-Analog Corp., its first investment since starting a $100 million
fund in the summer. With the Pentagon scouting for technology that
can be repurposed for military use, Lockheed said it wants to groom
young firms that could become potential suppliers or even
acquisition targets.
"They're not really ready yet for prime time in the defense
world," said Chris Moran, who was hired in the summer as general
manager of Lockheed Martin Ventures. He previously ran the venture
arm of Applied Materials Inc.
Mr. Moran said he is looking at more than 100 firms and will add
two more people to a staff of three spread between the Valley,
Washington and Boston.
San Diego-based IQ-Analog designs chips that can move data at
high speeds, which could be used in military sensors. Mr. Moran
didn't disclose how much it is paying but said Lockheed may
syndicate its initial investment to other commercial partners such
as cellphone makers working on fifth-generation devices that
require similar capabilities.
"This investment from Lockheed Martin also strengthens our
commercial strategy and ability to succeed among 5G technology
providers," said Mike Kapes, IQ-Analog's chief executive.
Lockheed's rotary and mission systems business unit, which
handles the bulk of its semiconductor work, spent a year preparing
for the investment.
Mr. Moran wants to create a supplier that in time could become a
subcontractor, rather than the traditional venture capital
objective of maximizing financial return.
Lockheed joins a parade of aerospace, defense and industrial
companies targeting emerging technology companies in Silicon Valley
with seed investment and partnerships. The investment is in line
with a Pentagon push to draw more commercial innovation into the
military.
Airbus Industrie SE, Jetblue Airways Corp and Ford Motor Co. are
among those that have established Silicon Valley offices and
venture capital arms.
Technology with potential defense applications has often faced a
tough sell to venture capitalists because of long lead times before
contracts are awarded, as well as concerns over intellectual
property ownership.
Outgoing defense secretary Ash Carter launched the Pentagon's
own courtship with Silicon Valley in 2015 and revamped it earlier
this year after the new Pentagon innovation office failed to gain
traction in the wider technology community.
Mr. Carter installed new leadership drawn from top tech firms,
including Apple Inc. and the Google arm of Alphabet Inc. Raj Shah,
an Air Force veteran and former executive at Palo Alto Networks
Inc., was appointed to head the initiative known as the Defense
Innovation Unit-Experimental.
Mr. Shah said at a recent defense conference that he viewed the
unit as a nonpartisan effort that he hoped would continue into the
administration of Donald Trump.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
December 15, 2016 11:49 ET (16:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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