Montalvo struggles to avoid running out of cash

— 1:17 PM on March 27, 2008

Now is a tough time to be a Silicon Valley startup bent on taking on Intel in the mobile processor market. If a report by VentureBeat is accurate, that's what the folks at Montalvo Systems are finding out. With a stripped-down website that includes only contact information and job postings, Montalvo may not look much. However, we found out last month that the company is made up of a team of industry veterans who are developing a power-efficient x86 mobile CPU based on a novel design that mixes high- and low-performance cores.

The problem is that Montalvo doesn't have a product yet, and it's chugging venture capital money a little too quickly. VentureBeat says the 300-employee startup has already managed to raise $73 million in funding, but that it's run into problems finishing its processor and is running out of money. Montalvo reportedly tried to raise over $100 million in extra funding recently, but it "has come up dry." VentureBeat quotes a venture capitalist Montalvo tried to lure as saying, "There are a lot of people and [they are] burning it quickly." The venture capitalist added, "No matter how much money you raise, it won't last long."

As VentureBeat points out, Montalvo's problems highlight just how difficult it is to challenge Intel in the x86 microprocessor industry today, and how difficult it is to put together complex new processor designs from scratch "even with tens of millions of dollars and hundreds of engineers." VentureBeat says the startup's woes also show how timorous venture capitalists have become in the face of costly semiconductor start-ups.

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