SAN JOSE, Calif. -- After making a big splash in 2006, configurable chip startup Cswitch Corp. has encountered rough waters amid the IC downturn.

Cswitch (Santa Clara, Calif.) quietly implemented a layoff in the fourth quarter of 2008 and is possibly seeking some new funding. Like many startups -- and established chip makers -- Cswitch hopes to weather the current economic storm as it attempts to ramp up its initial product line.

The company is one of several and promising FPGA-like startups to appear in recent times. Many of the FPGA startups are struggling in the recession. For example, not much has been heard from M2000. In fact, the company changed its name to Abound Logic last October.

Some FPGA-like startup vendors could ultimately go under, such as Ambric, MathStar and countless others. Still some could get acquired by bigger players--or Cisco Systems Inc.

The problem with Cswitch is that the startup is fielding a high-end, FPGA-like architecture at a time when communications and other OEMS have either delayed or scrapped many of their projects.

Observers wonder if Cswitch will survive over the long term. Doug Laird, president and CEO of the company, insisted the startup is moving full speed ahead with its strategy despite reports the firm is in deep trouble. ''We're not closing,'' Laird told EE Times. "We're battening down the hatches.''

''Cswitch is definitely still in business,'' added Bill Tai, a board member and a venture capitalist with Charles River Ventures, in an e-mail. ''It's an ongoing entity.''

Cswitch, a privately-held company, was founded in late 2003 by former executives of Transmeta, SGI and others. In 2006, Cswitch announced the completion of its second round of funding. The round was led by GF Private Equity and Harris & Harris. It included existing investors ATA Ventures, Charles River Ventures and Bay Partners. Masters Capital, Mitsubishi UFJ Capital and Micron Ventures also participated in the investment.

Narrowing the performance and density gap between FPGAs and structured ASICs, a novel configurable array architecture was unveiled by the startup in 2006. Combining a 2-GHz, on-chip interconnect network -- and an array of 1-GHz configurable packet engines -- Cswitch's so-called CS90 Configurable Switch Array claims to deliver scalable datapath processing at bandwidths unattainable by FPGA and network processor architectures. The device is based on a 90-nm process from Singaporean foundry partner Chartered Semiconductor Manufacturing Pte. Ltd.

Despite announcing the device architecture in 2006, Cswitch did not ship the product until mid-2008. ''We're shipping,'' Laird said. ''We have multiple people'' looking or buying the device.