Semiconductor Startup Builds Alternatives for Vital Legacy Chips

Phoenix Semiconductor, a U.S. startup founded in 2023, is repackaging off-the-shelf semiconductors to replace obsolete legacy chips for high-value defense and industrial systems, bridging a gap between low-volume demand and the large production runs favored by major foundries [1]. The Austin, Texas-based company designs interposers that connect modern, commercially available chips into multi-chip modules with pin-outs identical to phased-out components. “When you drop that part into the socket, it looks identical, indistinguishable from the original,” CEO Ryan Hatcher said. “There are no board updates. There are no software updates. There are no firmware updates. It just operates like the original.” [1] Hatcher, who worked at Samsung from 2013 to 2019, argues that large semiconductor foundries cannot economically serve customers needing only a few hundred specialized parts. “No one’s going to pick up the phone for a couple hundred chips,” he said [1]. The mismatch Phoenix targets is structural. Leading contract manufacturers such as Taiwan Semiconductor Manufacturing Co. (TSMC) rely on high capacity utilization to maintain profitability, with production runs for a single chip in a large fab sometimes lasting up to three years [1]. TSMC holds approximately 70 percent of the global semiconductor foundry market and serves as the main supplier for Nvidia, Apple, Broadcom, and Qualcomm [6]. Intel, the world’s third-largest semiconductor chip manufacturer by revenue in 2024, similarly depends on volume production for its x86 processor lines [5]. “There is demand for billions of dollars of legacy chips every year, and much of that demand literally doesn’t have a product in existence anymore,” said Jonathan Bronson, a managing partner at venture capital firm J2 Ventures, who joined Phoenix’s board in June 2025 [1]. Defense applications make up the largest share of Phoenix’s business, which also spans medtech, industrial applications, commercial aerospace, and oil and gas extraction [1]. In one case, the U.S. Navy turned to Phoenix for a replacement part needed to maintain the F/A-18F Super Hornet’s bleed-air control unit [1]. The broader U.S. policy environment has focused on strengthening domestic semiconductor supply chains. The CHIPS and Science Act, signed into law in August 2022, authorized roughly $280 billion in new funding, including $39 billion in subsidies for chip manufacturing on U.S. soil and $13 billion for semiconductor research and workforce training [2]. By March 2024, analysts estimated the act had incentivized between 25 and 50 separate potential projects, with total projected investments of $160–200 billion [2]. Phoenix’s approach addresses a different segment of the supply chain: not advanced-node fabrication but the sustainment of systems dependent on discontinued chips. Phoenix’s 15-member team assembles prototypes in its Austin lab and outsources commercial production to packaging firms such as Mikros, QP Technologies, and TTM [1]. In June, the company received ISO 9001 certification for quality management systems [1]. Hatcher said the company eventually aims to develop its own manufacturing flows optimized for high-mix, low-volume production, noting that even contract packaging partners face substantial switching costs between products [1].