Scoop: Ohio startup raises $14 million to onshore cellular module manufacturing
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China's Quectel is one of the world's largest manufacturers of IoT cellular modules, a key chip component, with nearly a 40% market share. Now it's licensing out its manufacturing tech and source code to an Ohio-based startup called Eagle Electronics, in a reversal of how these cross-border relationships have traditionally worked.
Why it matters: This reflects the U.S. onshoring trend for semiconductors, which is expected to intensify if President-elect Trump makes good on his threat to put new tariffs on China-made products.
Driving the news: Eagle Electronics was formed by venture capitalists Mark Kvamme (chairman) and TJ Dembinski (CEO), and tells Axios that it's raised $14 million in initial capital led by their Ohio Fund, with Asymmetric Capital Partners also participating.
- It's subleased space in a Cleveland suburb to install a pair of lines that should be producing by next March. After that, it hopes to move into its own facility.
- Quectel will send around 30 employees to Ohio for two months to train new Eagle workers, many of whom are being sourced via partnerships with local community colleges.
- Applications including everything from hunting cameras to vehicle telematics.
What they're saying: "For this particular product the U.S. is dependent on China," Kvamme says. "You've already seen onshoring in terms of things like Intel's new plants, and semiconductor modules are the next part of the supply chain."
- He adds that the "only way to get to cost parity" is by licensing what he believes to be China's superior manufacturing tech in this area, particularly its automated testing capabilities, although acknowledges that Eagle's prices will initially be higher than are imports.
Full circle: Kvamme's father Floyd — who helped form National Semiconductor's beachhead in Silicon Valley before later becoming a venture capitalist — got a Thanksgiving Day chuckle out of his VC son's semiconductor pursuit.
The bottom line: Decoupling sometimes causes coupling.
