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Chip start-ups faced financial blows in 2013

Posted: 14 Jan 2014 ?? ?Print Version ?Bookmark and Share

Keywords:IPO? semiconductor companies? venture fund?

The Global Semiconductor Alliance's most recent report paints a grim picture. Venture capital funding, public offerings, and acquisitions in the semiconductor industry is said to have fallen considerably in 2013 and will continue to do so.

Last year, 32 semiconductor funding deals raised $357.8 million; the dollar amount decreased 62.9% from 2012. First-round financings for semiconductor start-ups fell 75.9% to $19.6 million. No IPO filings from semiconductor companies were reported in December, and there are no semiconductor companies awaiting an IPO pricing, the industry trade group's report said.

Chip start-ups faced financial blows in 2013

Figure 1: Steep decline in VC funding for chip start-ups. Source: GSA

The number of mergers and acquisitions of entire companies fell from 59 in 2012 to only 38 in 2013. The largest deal in December-and the second-largest deal of 2013-was Avago Technologies' agreement to acquire LSI Corp. for $6.6 billion.

Dan T. Niles, chief investment officer at the hedge fund manager AlphaOne Capital Partners LLC (who was not involved in compiling the report), told EE Times that the gloom is likely to deepen. The increasing costs of semiconductor process technology, rising design complexity, and a relatively slow-growing market for chips will depress the financials for the foreseeable future.

"At the end of the day, global demand is still pretty meagre, and more importantly for semiconductors, you have slowing in Moore's Law, combined with ultra-small geometries, creating a cost prohibitive environment," Niles said. "To get improvements in products, you need to spend more money, because the laws of physics are working against you."

- Rick Merritt
??EE Times





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