MORRISVILLE,After months of work, including an 11th hour collapse of an earlier deal, semiconductor packaging maker Ziptronix has closed on another $13.9 million in second-round financing.

The company, which was spun out of nonprofit research center RTI International three years ago, closed on the initial $3.5 million portion of its $17.4 million round last August and had hoped to complete the deal by the end of 2002 so it could further develop its technology and move into full-scale production.

Chief Executive Doug Milner says a term sheet had been put together by late December, but then a major investor pulled out early this year and the company had to go back to the drawing board to assemble a new funding syndicate.

Grotech Capital Group of Timonium, Md., which last summer invested in Durham-based Hatteras Networks, was actively scouting the Research Triangle area for new deals, and “a number of parties” introduced the firm to Ziptronix, Milner says. Grotech liked what they saw so much that they decided to co-lead the funding round with
Intersouth Partners of Durham.

Other new investors include iSherpa Capital and MCNC Enterprise Fund, which marks the fund’s first large investment after being created last year during the reorganization of the MCNC research center. Alliance Technology Ventures, San Jose, Calif,-based programmable logic chip maker Xilinx, Research Triangle Ventures and RTI participated in the initial closing last summer.

“It will be nice to put away the tin cup for a while,” Milner says, noting he can now turn his attention back to running the business. “One of the good things to come out of this is that we actually built the business while all of this fund raising was going on, so we now have a pipeline to work with.”

Chip-based towers

Ziptronix has developed a way to bond integrated circuits together at room temperature without adhesives, which allows for the creation of different architectures, including 3-D chips.

The company has customers across a range of industries, from computers to telecommunications to automotive, that use its bonding process to produce custom substrates with specific thermal or other characteristics or to encapsulate silicon wafers for MEMS and RF devices, reducing the handling needed for these chips and cutting production costs.

For example, Sawtek of Orlando, Fla., is using bonded wafers to build filters for new wireless communications and wireless Internet applications.

The 3-D chip technology was introduced last fall, and much of the new funding will be used to hire designers to get that effort off the ground, Milner says. Corporate partners have been helping the company design prototypes until now.

Like office towers, the chips can combine various “tenants.” Different materials, like gallium nitride and CMOS, or different functions, like logic and memory, can be put on separate “floors” of the 3-D chips, reducing power consumption and size while providing faster processing speeds.

“Ziptronix has made outstanding progress over the past year despite a very difficult market,” Intersouth’s Mitch Mumma said in a statement. “This speaks to the compelling need for new technologies that deliver simultaneous improvements in size, cost, speed and power dissipation.”

More room to grow

In early April, Ziptronix doubled its space, moving from incubator space within RTI into 25,000 square feet near Raleigh-Durham International Airport. Milner says the extra room will allow the company to build a full-scale fabrication room – it had handled only prototype quantities previously – which should be operational by July.

“Customers want a good, reliable source of supply,” he says. “Our issues right now aren’t sales, they are manufacturing and getting product out the door.”

Milner expects to increase Ziptronix’ payroll by more than 50 percent, to about 40, by the end of the year by adding designers and production workers.