Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Poor State Of IC VC Investment

The poor state of the semiconductor Investment climate has been highlighted in a report from thr GSA.

In the last twelve months, 38 semiconductor funding deals raised $422.4 million, reports GSA, a decrease of 54.8% from the $934.3 million raised in the previous twelve months.

Semiconductor start-ups received $17.6 million in first round financings in the last twelve months, a decrease of 76.0% from the $73.4 million received in the prior twelve months.

No IPO filings from semiconductor companies were reported in October and there are currently no semiconductor companies awaiting an IPO pricing.

In October 2013, two semiconductor funding deals raised $3.2 million. In 2013, only 32 semiconductor funding deals were announced, a decrease of 56 such deals YTD.

The largest M&A deal in October occurred when Microsemi Corporation entered into a definitive agreement to acquire Symmetricom Inc., a provider of precision time and frequency technologies, for a total estimated transaction value of $230.0 million.

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  1. Keith
    November 08, 2013 10:40

    Fact is that the VCs have realised that they have to put a lot of money into a semi startup and risk getting not a great return. Whereas with a software startup e.g. Facebook, Twitter etc. there is a much smaller initial investment and a much bigger ptential return.

  2. November 07, 2013 10:09

    David, when I read this blog posting I actually gave a little cheer. Why? Well this just tells us what we already know… the fabless start up model is on life support. Few today would entertain such a model and go for IPO… acquisition is more likely but only from an IP perspective.

    As one of our members once said “the semiconductor industry is not broken but the model may be”… I agree with this. When I look at the potential for this industry it has never been greater: there is a buzz phrase that has been doing the rounds for a while now: “The Internet of Things” – billed as “The quiet revolution”. To us in this space we continue to march along with our evolution – to the outside world that often appears as revolution. IoT is bigger than anything we have ever seen… PC, Mobile combined – truly massive. However, the old business models will not serve us well in this industry in the future. Disruption is taking place everywhere I look – caused by what used to be known as electronics, and what now is termed Electronic Systems (a subtle name change I grant you but important as it recognises both systems and software).

    Oh, and here’s another buzz term for you “servitisation” (as an Englishman I am not completely comfortable with turning nouns into adjectives)… semiconductors are at the very heart of this new opportunity but start ups will have to create their models around the resultant (and valuable) services that are delivered to realise their full potential… so, the semiconductor start up is dead – long live the semiconductor start up!

  3. david manners
    November 07, 2013 16:06

    Wise words, John, we’ve had the IDM model, the fabless model, the IP model – the industry model constantly evolves – so what next? I think it may be something based on either new materials or bugs.