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Israeli start-up Transchip completed its third round of financing, closing $5.5 million, despite the war in Iraq and uncertainty in the U.S. market.

The miniature camera-maker raised the entire sum from American venture capital funds and corporations. The round was led by VC Mission and included chip design tool maker Cadence as well as the founders of Analog Devices and Qualcomm.

Transchip's single-chip model allows digital photography, image processing and compression. The chips are currently slated for cellular telephones.

The company was founded in 1999 by a group of former executives from IBM, Intel and Zoran's Israeli development centers, creating a first prototype in under four months.

The company revealed its first family of products, camera chips for GSM devices, in June 2002. It is estimated each miniature camera will sell to cellular telephone makers at $10-15.