Venture capital: semiconductor firm adds second fund.

• Author: Marshall, Jeffrey
• Position: BusinessBRIEFS - Plannings of Xilinx

The biggest, most successful technology companies are sitting on what some industry experts say may be a collective $100 billion pile of cash. Apart from buying rivals (a la Oracle), paying dividends--which many don't do--or buying back their stock, how could they deploy some of that?

Many have set up venture funds to encourage entrepreneurs to develop applications or products that advance the general state or technology--or promote their own platforms. A case in point is Xilinx, a $1.6 billion semiconductor maker, which is adding a second venture fund to one it formed in 1999. This second fund, dubbed the Ecosystem Venture Fund, has been targeted at $100 million and is aimed at fueling industry design within the company's "ecosystem" for programmable system design. Xilinx says it plans to invest in emerging technology companies delivering design solutions, with a focus on high-speed digital processing, embedded processing and high-speed connectivity.

The San Jose, Calif.-based company has committed $40 million in funds to date through its $75 million Technology Growth Fund, established six years ago, with investments ranging from $500,000 to $5 million.

One reason why a company like Xilinx can create an in-house venture unit is, quite simply, because it has the wherewithal. "If you pull up Xilinx's balance sheet, we are literally a bank," said CFO Kris Chellem in an interview. "Of our total assets of $3 billion, close to $2 billion is in cash and investments. We're a soft-asset company. One of the opportunities we have to create value is through 'imagination machines.'"

[ILLUSTRATION OMITTED]

Chellem points out that major tech firms like Microsoft, Intel, Cisco Systems, Dell and Apple had formed similar venture units, going back as much as 20 years. "With the advent of Internet and with...