Diablo gets $28M to marry memory and the processor

Diablo Technologies, a Canadian company that is building a custom chip that will improve flash memory performance in the data center, has raised $28 million in a recapitalization round. The round was led by Battery Ventures, with Celtic House Venture Partners, BDC Venture Capital, and Hasso Plattner Ventures participating. The company plans to use the money to embark on a new strategy that involves building software and systems expertise in addition to semiconductor IP.

Several of the investors have returned from an earlier $35 million round that the nine-year-old business had raised when it was pursuing a slightly different business, one that also relied on boosting the performance of memory in the data center. Riccardo Badalone, a co-founder and CEO of Diablo, said the company wouldn’t get too specific about its plans, but he did say that it is working on a silicon product that will marry the processor and flash memory to help boost performance. This is yet another evolution in bringing the memory and processing power closer together to speed up applications. Fusion-io (s fio) does this, only its business was built on putting the memory on the PCI express card.

Badalone says he can bring it closer. That would help get more data to the processor and in turn let the processor take on more information. And in today’s web-based business or cloud environments, the more your processors run, the more money you make. That sentiment is why flash memory and ways to increase its performance are rapidly gaining interest –and why Fusion-io has done so well.

Diablo is borrowing a tactic from Fusion-io in that it is working with equipment makers to put its technology — called Memory Channel Storage — inside servers. Its previous product was qualified on Dell, HP and IBM systems, which is one reason that investors ponied up for the latest round even as Diablo was switching strategies. Badalone anticipates using similar partnerships with its chip technology, although he declined to name any of those potential partners or existing customers.

The company has 40 employees and plans to grow to 50 or 60 in the coming year, and Badalone is optimistic about the performance of the systems when it eventually hits the market in 2013. “We will be the first company in the world to marry RAM and Flash in the memory subsystem and once you do that the performance of the I/O will be such that people will lok at the numbers, and frankly, they will not believe it,” Badalone said.