The continuing drive for lower power and smaller size in semiconductors is giving electronics manufacturers reason to question the quartz-based oscillators that have dominated the clock technology industry for decades, and several start-ups have emerged to offer alternatives.

The latest is Multigig Inc., which recently closed its first round of institutional financing with a $12.5 million Series B round led by CMEA Ventures. Sierra Ventures and Hi-Tech Venture Capital also participated in the round, according to Haris Basit, the company's chief executive. Basit declined to provide the company's valuation.

Time synchronization chips send out pulses of energy to make sure that parts of a circuit are performing their functions at the appropriate time. As the number of clock cycles increases - a common method of adding processing power - the energy consumption also increases.

Multigig's technology sends the pulses around the circuit in a square loop, allowing much of the power to be recycled, rather than disappearing across the chip.

Lower power consumption is not the only attraction for electronics manufacturers. Putting the functionality of a crystal oscillator on a chip also leads to lower cost, smaller footprint and more available bandwidth. Crystals themselves are relatively cheap, but they come with extra components that are needed to maximize their performance and limit the noise they create that can interfere with a device's operation. They also tend to stick out of the circuit board, taking up additional space.

The market for timing devices is large and growing at a much faster pace than the overall market for semiconductors, and investors are paying attention. Annual revenues surpassed $1.63 billion in 2007, up almost 9% from the previous year. Overall semiconductor revenues only grew at 3.8%, according to research firm Gartner Inc.

"The growth of mobile devices and a need for lower cost, lower power and more robust devices have all put greater pressure on the need for efficient timing," said Charles Chi, a general partner with Greylock Partners, an investor with SiTime Inc., which is building chips that replace the crystals with micro electromechanical systems.

The business model for these companies is also attractive - since every electronic device needs a timing mechanism, the products will be applicable to a wide range of vertical markets. The company won't be dependant on one or two large customers, Chi said.

In December, Mobius Microsystems Inc. raised $10 million in Series B financing from Foundation Capital and Menlo Ventures to bring its chips to market. Around the same time, Silicon Clocks Inc., another company that utilizes micro electromechanical systems in its designs, raised the second tranche of its Series A round from Charles River Ventures, Formative Ventures, Lux Capital Management and Tallwood Venture Capital. Discera Inc., which also uses a micro electromechanical system, raised $17.5 million last year from investors including Scale Venture Partners and 3i Group.

In addition to developing disruptive technology, many of these companies build analog chips rather than digital, which greatly reduces the amount of capital needed to get to market.

"The mask sets are less expensive because you are using less advanced process geometries and the number of engineers needed is in the tens, rather than hundreds," said Faysal Sohail, the partner at CMEA who led the investment in Multigig. "Given the exit environment in the semiconductor industry, you have to look for companies where you can build products with a lot less capital."

The spate of start-ups will not necessarily compete with each other. The applications for each of their products will depend on the level of precision that each is able to achieve. Consumer electronics require less precision than computing products. Communications require the highest level of precision, said Sergis Mushell, a principal analyst at Gartner.

Multigig will target high-performance wired communications with its first product, which should be generally available soon. This is the same market being targeted by Silicon Clocks, which uses quartz crystals alongside micro electromechanical systems.

The proceeds of Multigig's latest financing will mostly be used for continued product development. The company is planning to target wireless communications equipment, such as base stations, which require a level of precision that hasn't been achieved with an integrated circuit, Basit said.

The technology behind Multigig has been in development since 2000, but the company was officially founded in 2004. Prior to this round it raised about $10 million from angel investors, Basit said.

In addition to Sohail of CMEA, Ben Yu, a managing director of Sierra Ventures, and Aurangzeb Khan will join the Scotts Valley, Calif.-based company's board.