Fabless revenue hits $33bn

European fabless semiconductor firms accounted for just two per cent of worldwide revenues in the sector, according to figures from the Fabless Semiconductor Association (FSA)

Japan fared even worse - its fabless firms took just two per cent of the $33bn fabless revenue reported in 2004, a number 27 per cent higher than 2003.

On a geographic basis, US fabless companies represented 75 per cent of Q4 2004 revenue, followed by Taiwan at 20 per cent.

The top five fabless companies, ranked by calendar year 2004 revenue were led by Qualcomm, followed by Broadcom, ATI Technologies, Nvidia and SanDisk.

While the fabless sector continues to experience year over year revenue growth, funding decreased in Q4, but the private industry still raised $1.8bn in 2004, the largest amount since 2001 when it raised $2.5bn.

Funding for fabless companies started strong, but both the number of funding deals and the investment amounts declined quarter-over-quarter for every quarter last year, with the exception of Q2.

Q1 2004 generated $560.1m, compared to $543.7m in Q2, $434.2m in Q3 and $263.5m in Q4.

“Venture capitalists have continued to gradually increase investment in fabless companies for the third year in a row,” said Philip Gianos, general partner with InterWest Partners and member of the FSA VC advisory board.

“The trend is towards earlier stage investments and lower capital commitments because venture investors prefer capital efficient companies and are continuing the move towards outsourcing and offshore development to lower capital requirements,” he continued. “Low values realised from recent acquisitions are a prime reason for this movement."

These statements are at odds with observations on the European VC market. Stuart McKnight, managing director of Ascendant, the corporate finance company that specialises in fund raisings and M&A for technology companies, recently told Electronics Weekly: “It’s much easier to raise £3m or more than £3m or less."

www.fsa.org