Israeli startup

Saifun Technologies

recently received a further $7 million investment from

Infineon Technologies

, TheMarker.com has learned. Moreover, the two companies are about to officially announce the launch of a joint venture, named Ingentix.

Saifun also recently made headlines for handing each workers a half-million shekel cash loan, backed by stock options.

The investment deal between Saifun and Infinion, formerly Siemens Semconductor Group, was not a regular financing round, but a show of serious intention by the German company.

The financing valued Saifun at $400 million, exactly the same valuation at which the startup held its last financing round in October 2000. Infinion kicked in then too, alongside Morgan Stanley, Banc of America, and a host of Israeli companies -

M-Systems Flash Disk Pioneers

(Nasdaq:FLSH),

Tower Semiconductors

(Nasdaq:TSEM), Clal Industries, and several venture capital funds.

Although a $7 million booster shot is no small beer for almost any startup these days, in Saifun's case the significance is almost entirely symbolic. It does not need the cash, given that it has been posting handsome revenues since February 1998. In fact, Saifun has barely touched the $40 million it raised in October.

The future is multimedia cards

Ingentix, the startup Infineon and Saifun recently launched, develops multimedia cards. Saifun holds 49% of the venture, and Infineon holds the rest. Its establishment cost them $40 million.

Saifun's founder, Boaz Eitan, says that multimedia cards are basically memory cards. He believes these cards will eventually replace media such as CD disks and tapes.

Saifun has plans to set up two other joint ventures, which will engage in R&D and production, with other strategic partners. One might be devoted to flash chips, which could also benefit from the company's proprietary NROM technology. The other will focus on embedded smart cards, such as are used in electronic wallets.

Enormous kitty

Saifun is all of three years old and is highly R&D-oriented. But it is sitting on a huge $50 million kitty. Even before it had working products, it had begun to license out its breakthrough chip-making technology.

Founder Boaz Eitan, who holds a doctorate in physics from the Hebrew University, established the company as an almost academic venture to try to design a new kind of non-volatile memory chip.

Eitan says his ideas were revolutionary in the chipmaking industry. At first experts scoffed, believing he faced insurmountable physical problems. Saifun proved the experts wrong.

Its NROM technology can store twice the amount of data per number of transistors than pre-existing technology, using far simpler manufacturing methods. Production is 30% cheaper and is greatly more efficient, resulting in fewer numbers of defective products.

Coming soon: Sales of half a billion dollars, the company believes

Its first product, released in February 2001, is a parallel EEPROM chip with a capacity of 4 megabits. It was the first EEPROM chip to demonstrate a higher cost-efficiency ratio than flash chips.

Saifun intends to present a smaller chip with a capacity of 256 kilobits, in order to address current market needs. In a couple of months it means to release its latest product, an EEPROM chip with a capacity of 16 megabits.

To date most of the company has made money mostly from licensing out use of its manufacturing technology, and from royalties. Most of its partners are still secret, but one whose identity has been revealed is the Taiwanese company Macronix.

Saifun's projections are astonishing. Its management believes the company will end 2001 with revenues of $19.5 million and an operating profit of $11 million. Plenty of older, more mature companies can only envy projections like these. It expects to double its sales in 2002 to $37 million.

Forecasts for 2004 are truly sky-high at half a billion dollars.

Eitan notes a study showing that in 2004, the market for NVMs will exceed $39 billion, compared with $15 billion in 2000. He believes that the manufacturing of 20% of the market will be based on Saifun's NROM technology.