US technology industry investment seems to have lost interest in the chip industry. In sharp contrast, the Chinese chip industry is experiencing a boom. Supported by global manufacturing centers for semiconductor chips, China is playing an increasingly important role in chip design and innovation.
At present, venture capitalists are investing heavily in social networks, e-commerce and online game companies, but the chip industry has no longer prevailed, and investment in this area is approaching a new low in 12 years.
Semiconductor chips based on silicon crystals have become the brain center of many core products such as personal computers, mobile phones and even nuclear bombs on the market. However, the initial investment in manufacturing chips is huge, and investors are often discouraged. Before the official launch of the chip, chip makers often spend millions of dollars on chip development and testing. This part of R&D and testing costs has forced many US domestic chip companies to shift their chip manufacturing facilities to other countries that provide tax relief and special subsidies in order to save costs. At the same time, the cost of investing in software and Internet companies has fallen dramatically due to the relatively low cost of network-based programs and services.
The US chip industry should reflect on it early
According to data released by the National Venture Capital Association (NVCA), the total amount of venture capital financing of US chip companies in the first nine months of this year has dropped from $1.39 billion in the same period in 2008 to $894.9 million, a drop of 36%. In 2009, the total amount of venture capital financing of US chip companies was only 863.8 million US dollars, the lowest level since 1998. NVCA's statistics also show that as of this year, the first venture financing of chip companies accounted for only 1.1% of all initial financing, making it the industry with the smallest proportion of the 16 industry sectors tracked by NVCA. Software companies accounted for the top position of the NVCA tracking industry with 17% of the first risk financing ratio.
In the past two years, venture capitalists and other investors have injected hundreds of millions of dollars into the social networking industry's Facebook and Twitter, online game maker Zynga, and group buying site Groupon. The market value of these companies has also reached or exceeded one billion US dollars.
The chip industry loses investment attraction
In addition, a group of investors named “Super Angels†emerged in the market. They only focused on investing in Internet companies in the early days of the venture. At present, a chip production plant designed and built according to the world's top standards will cost more than 4 billion. The dollar, and its best use period is only about five years.
The high investment trend of the chip industry is not feasible
Kishore Seendripu, CEO of chip company MaxLinear, said: "The trend of high investment and slow returns in the US chip industry is extremely unfeasible." The company is one of the five chip companies listed in the US in the past two years.
Most US chip companies even gave up their own production of chips that they independently developed, and instead outsourced manufacturing tasks to chip foundries in Taiwan. According to a report released by the Semiconductor Equipment and Materials International (SEMI), Taiwan surpassed the US in chip production as early as 2005, and has since consolidated its leading position in the field. .
Market demand for chips is unstable
The huge changes in demand for electronic equipment in the market have made investors very cautious about investing in the chip industry. Seendripu said that the volatility of internal demand in the chip industry means that a chip company that wants to finance must be profitable and supported by large customers.
Dado Banatao, an investor at venture capital firm Tallwood Venture Capital, said he wants to be the "last warrior" in the investment chip industry. The 37-year-old veteran venture capital investor has served as the head of National Semiconductor Engineering and is looking for Early start-ups with great potential for appreciation have more than 10 years of rich investment experience. China Lighting Association LED lighting portal.
In the past five years, Banatao has been encouraging its companies to rapidly expand overseas, especially in the Chinese market, in order to take full advantage of the support policies of governments and low production cost advantages.
Recently, 64-year-old Banatao said in an interview with the company's headquarters office in Palo Alto, Calif.: "We are all used to setting up a technology company in Silicon Valley, but we will not realize that it will develop overseas until the company's development scale gradually expands. The market has brought tremendous opportunities to the company's development. From the moment we raised our own funds, we have been considering the possibility of expanding the international market."
Since the beginning of 2009, the number of Chinese chip companies conducting IPOs has far exceeded the number of US chip companies in the same period.
According to statistics released by the Semiconductor Industry Association, the growth of the Asian market has boosted the sales revenue of the global chip industry. It is estimated that the global chip industry sales revenue will increase by 33% year-on-year to more than $300 billion this year.
Brian Toohey, president of the American Semiconductor Industry Association, said: "The development of the US chip industry is quite mature, and its cost is huge. The future competition in the industry will be very intense."
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