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A Toronto startup looking to challenge computer chip giants Qualcomm Inc. and Intel Corp. in the wireless market has raised US$42-million in a venture capital deal.

Peraso Technologies Inc., whose semiconductor technology derives from inventions by University of Toronto engineering professor Sorin Voinigescu, offers products that address two emerging trends in the wireless market. Its semiconductors promise to offset increasingly congested wireless networks and hot spots as data usage soars, and it is one of just three companies offering a new type of chip expected to be key for next-generation 5G wireless networks.

“We’re right in the thick of things when it comes to the next generation of wireless technology and we see some significant growth potential over the next several years,” said Ron Glibbery, founder and senior vice-president of corporate development of Peraso, which raised the latest funding from existing backer Roadmap Capital and two unidentified American wireless sector firms. Peraso has raised US$112-million since its founding in 2009; past backers include U.S. semiconductor makers Qorvo Inc. and Integrated Device Technologies Inc. and Canadian venture capital firms Celtic House Venture Partners and iNovia Capital.

Peraso makes chips for the high-frequency and unregulated 60 gigahertz (GHz) band, also known as WiGig, which allows for higher data rates and network capacity than current WiFi routers can handle. But the technology, which is made for devices including TVs, smartphones and laptops, has also been expensive and challenging to develop and comes with drawbacks, including the fact its range is usually limited to individual rooms.

However, Peraso, which already generates millions of dollars in annual revenue, expects demand to soar with increasing data usage, shrinking production costs and the trend toward internet service providers and corporations installing multiple routers to counter congestion issues. Tech firms including Facebook and Apple are reported to be working on WiGig applications and industry watchers say virtual reality headset makers can ditch thick wires and instead rely on WiGig for their data transmission needs. “The technology is solid and the market is about to take off,” said Imed Zine, a principal with Toronto-based Roadmap.

Peraso has high hopes that smartphone makers will need its chips for the “millimeter wave” band of the spectrum that will accommodate 5G. Chip makers have struggled to make such semiconductors because they suck up power, produce much heat and can have performance issues when walls, hands or rain get in the way of transmissions. Peraso, Qualcomm and Intel are the only chip makers to have overcome those challenges. “With millimeter wave going into the handsets, there are only a few doors to knock on. Peraso is one of them,” said Celtic House partner David Adderley.

With Canadian universities coming under fire recently for research deals that allow foreign giants to reap the commercial benefits of Canadian taxpayer-funded inventions – particularly China’s Huawei Technologies Co. Ltd. – Waterloo, Ont., intellectual property lawyer Jim Hinton said Peraso “is a great example of Canadian university-generated IP forming the foundation of a strong Canadian company. ... [It is] a true example of how universities can contribute to helping Canadian companies commercialize globally.”

But Peraso’s Canadian status might not last long. Phil Solis, research director with market research firm IDC, said Peraso “is likely a potential acquisition target.” Peraso chief executive Bill McLean agreed that an acquisition by a foreign buyer “is probably likely. … If you talk to our investors that’s certainly their hope."

But one of the investors said “we’d be happy to see Peraso go public ... and be a large semiconductor company here in Canada. …

"[It] would be exciting to see that company continue to go on [as a Canadian entity] and not sell early,” Roadmap Capital’s Mr. Zine said.