U.S. technology industry investment seems to have lost interest in the chip industry. At present, venture capital investors are investing heavily in social networks, e-commerce, and online game companies. However, the chip industry has already lost its prestige, and investment in the sector is approaching a 12-year low.
Semiconductor chips with silicon crystals as the main material have become the brain centers of many core products such as personal computers, mobile phones and even nuclear bombs on the market. However, the huge investment in the early stage of manufacturing chips often deterred investors. Prior to the official launch of the chip, chip makers often spent millions of dollars to develop and test the chip. This part of the R&D and testing costs has forced many domestic chip companies to transfer chip production plants to other countries that provide tax breaks and special subsidies in order to save costs. At the same time, due to the relatively low costs of web-based programs and services, the investment costs for establishing software and Internet companies have been significantly reduced.
Ken Lawler, a principal investment partner of venture capital firm Battery Ventures, headquartered in Menlo Park, Calif., said: "The chip company never lacks creativity, but it is increasingly difficult to find investment partners."
In stark contrast to this, the Chinese chip industry is experiencing vigorous growth. With the support of the global manufacturing center of semiconductor chips, China is playing an increasingly important role in chip design and innovation. According to a report published by PricewaterhouseCoopers LLC, a world-renowned consulting firm, in November this year, China’s share of the global chip patent market this year has risen from 22% last year to 33%.
The US chip industry should reflect early on Matthew Cowan, one of the co-founders of Bridgestone, a venture capital firm in Menlo Park, USA, said: “From the perspective of global competition, the United States has reached a point of trouble. "Cowan had previously worked in Intel Corporation's corporate development department.
According to data released by the National Venture Capital Association (NVCA), the total amount of venture capital financing for chip companies in the United States has dropped from US$1.39 billion in the same period of 2008 to US$894.9 million in the first nine months of this year, a decrease of 36%. In 2009, the total amount of venture capital financing for US-based chip companies was only US$863.8 million, the lowest level since 1998.
NVCA's statistics also show that as of this year, the first venture financing of chip companies only accounted for 1.1% of the total initial financing amount, which became the industry with the smallest proportion of 16 industrial sectors tracked by NVCA. Software companies occupy the top spot of the NVCA tracking industry with 17% of the initial 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 company Zynga, and the group buying site Groupon. The market value of the above companies also reached or exceeded one billion US dollars, respectively.
Chip industry loses investment attraction In addition, a group of investors called “super angels†has rapidly emerged in the market. They only pay attention to investing in Internet companies in the early days of startup.
Hercules Technology Growth Capital Inc., a venture capital firm headquartered in Palo Alto, California. Manuel Hernandez, chief executive, said: "The industry has become less attractive to investors, and there is almost no visibility into the expansion of the chip industry."
Silicon Valley is a new word created in the 1970s. It is located in the south of San Francisco Bay in northern California. It was famous for the design and manufacture of silicon chips in the early days. It got its name, including National Semiconductor Corp. and Intel. And large chip companies such as AMD are located here.
At present, a chip production factory designed and built according to the world's top standards will cost more than 4 billion U.S. dollars, and its optimal service life is only about five years.
Kishore Seendripu, chief executive of MaxLinear, the chip company's high-input trend, said: "The US chip industry's high investment and slow return are extremely infeasible." The company is one of the five chip-listed companies in the United States in the past two years.
Most American chip companies have even given up their own production of chips that they have independently developed, and have instead outsourced their manufacturing tasks to Taiwan's chip foundries for production. According to a report released by Semiconductor Equipment and Materials International (SEMI), Taiwan had surpassed the United States in chip production as early as 2005, and since then has consolidated its leadership in this field. position.
MaxLinear's chip products are mainly used in TV set-top boxes, digital TVs, personal computers and mobile phones, and Seeddripu uses its own personal funds to provide financing opportunities for the company.
Seendripu said that at first MaxLinear could not find investors at all. The two banks that they later worked with, Deutsche Bank AG and Morgan Stanley, told MaxLinear to abandon the IPO plan. After the IPO was forcibly implemented, the company's stock price has fallen by 25%.
Demand for Chips in the Market Is Unstable The huge change in demand for electronic devices in the market has made investors very cautious about investing in the chip industry. Seendripu said that the fickleness of internal demand in the chip industry means that a chip company that wants to finance must have profitability, and at the same time have large customers as support.
Dado Banatao, an investor in venture capital firm Tallwood Venture Capital, said he hopes to become the "final warrior" in the investment chip industry. This veteran venture investor with 37 years of experience in the industry has served as National Semiconductor Engineering Supervisor and has more than 10 years of rich investment experience in finding early startups with great potential for appreciation.
In the past five years, Banatao has been encouraging its companies to rapidly expand overseas, especially in the Chinese market, in order to make full use of national government support policies and low production cost advantages.
Banatatao, 64 years old, said in an interview with the company’s headquarters in Palo Alto, Calif.: “We are all accustomed to setting up technology companies in Silicon Valley, but we don’t realize that until the company’s expansion gradually expands. The market has brought great opportunities for the development of the company. From the moment we raised our own funds, we have been considering the possibility of expanding the international market.â€
From the beginning of 2009 to the present, the number of Chinese chip companies that conduct IPOs far exceeds the number of US chip companies in the same period.
The statistics released by the Semiconductor Industry Association show that the growth of the Asian market has contributed to the increase in sales revenue of the global chip industry. It is estimated that the sales revenue of the global chip industry will increase by 33% year-on-year to more than US$300 billion.
Brian Toohey, president of the Semiconductor Industry Association of America, said: "The development of the US chip industry is quite mature and its cost is huge. The future competition in this industry will be very fierce."
Semiconductor chips with silicon crystals as the main material have become the brain centers of many core products such as personal computers, mobile phones and even nuclear bombs on the market. However, the huge investment in the early stage of manufacturing chips often deterred investors. Prior to the official launch of the chip, chip makers often spent millions of dollars to develop and test the chip. This part of the R&D and testing costs has forced many domestic chip companies to transfer chip production plants to other countries that provide tax breaks and special subsidies in order to save costs. At the same time, due to the relatively low costs of web-based programs and services, the investment costs for establishing software and Internet companies have been significantly reduced.
Ken Lawler, a principal investment partner of venture capital firm Battery Ventures, headquartered in Menlo Park, Calif., said: "The chip company never lacks creativity, but it is increasingly difficult to find investment partners."
In stark contrast to this, the Chinese chip industry is experiencing vigorous growth. With the support of the global manufacturing center of semiconductor chips, China is playing an increasingly important role in chip design and innovation. According to a report published by PricewaterhouseCoopers LLC, a world-renowned consulting firm, in November this year, China’s share of the global chip patent market this year has risen from 22% last year to 33%.
The US chip industry should reflect early on Matthew Cowan, one of the co-founders of Bridgestone, a venture capital firm in Menlo Park, USA, said: “From the perspective of global competition, the United States has reached a point of trouble. "Cowan had previously worked in Intel Corporation's corporate development department.
According to data released by the National Venture Capital Association (NVCA), the total amount of venture capital financing for chip companies in the United States has dropped from US$1.39 billion in the same period of 2008 to US$894.9 million in the first nine months of this year, a decrease of 36%. In 2009, the total amount of venture capital financing for US-based chip companies was only US$863.8 million, the lowest level since 1998.
NVCA's statistics also show that as of this year, the first venture financing of chip companies only accounted for 1.1% of the total initial financing amount, which became the industry with the smallest proportion of 16 industrial sectors tracked by NVCA. Software companies occupy the top spot of the NVCA tracking industry with 17% of the initial 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 company Zynga, and the group buying site Groupon. The market value of the above companies also reached or exceeded one billion US dollars, respectively.
Chip industry loses investment attraction In addition, a group of investors called “super angels†has rapidly emerged in the market. They only pay attention to investing in Internet companies in the early days of startup.
Hercules Technology Growth Capital Inc., a venture capital firm headquartered in Palo Alto, California. Manuel Hernandez, chief executive, said: "The industry has become less attractive to investors, and there is almost no visibility into the expansion of the chip industry."
Silicon Valley is a new word created in the 1970s. It is located in the south of San Francisco Bay in northern California. It was famous for the design and manufacture of silicon chips in the early days. It got its name, including National Semiconductor Corp. and Intel. And large chip companies such as AMD are located here.
At present, a chip production factory designed and built according to the world's top standards will cost more than 4 billion U.S. dollars, and its optimal service life is only about five years.
Kishore Seendripu, chief executive of MaxLinear, the chip company's high-input trend, said: "The US chip industry's high investment and slow return are extremely infeasible." The company is one of the five chip-listed companies in the United States in the past two years.
Most American chip companies have even given up their own production of chips that they have independently developed, and have instead outsourced their manufacturing tasks to Taiwan's chip foundries for production. According to a report released by Semiconductor Equipment and Materials International (SEMI), Taiwan had surpassed the United States in chip production as early as 2005, and since then has consolidated its leadership in this field. position.
MaxLinear's chip products are mainly used in TV set-top boxes, digital TVs, personal computers and mobile phones, and Seeddripu uses its own personal funds to provide financing opportunities for the company.
Seendripu said that at first MaxLinear could not find investors at all. The two banks that they later worked with, Deutsche Bank AG and Morgan Stanley, told MaxLinear to abandon the IPO plan. After the IPO was forcibly implemented, the company's stock price has fallen by 25%.
Demand for Chips in the Market Is Unstable The huge change in demand for electronic devices in the market has made investors very cautious about investing in the chip industry. Seendripu said that the fickleness of internal demand in the chip industry means that a chip company that wants to finance must have profitability, and at the same time have large customers as support.
Dado Banatao, an investor in venture capital firm Tallwood Venture Capital, said he hopes to become the "final warrior" in the investment chip industry. This veteran venture investor with 37 years of experience in the industry has served as National Semiconductor Engineering Supervisor and has more than 10 years of rich investment experience in finding early startups with great potential for appreciation.
In the past five years, Banatao has been encouraging its companies to rapidly expand overseas, especially in the Chinese market, in order to make full use of national government support policies and low production cost advantages.
Banatatao, 64 years old, said in an interview with the company’s headquarters in Palo Alto, Calif.: “We are all accustomed to setting up technology companies in Silicon Valley, but we don’t realize that until the company’s expansion gradually expands. The market has brought great opportunities for the development of the company. From the moment we raised our own funds, we have been considering the possibility of expanding the international market.â€
From the beginning of 2009 to the present, the number of Chinese chip companies that conduct IPOs far exceeds the number of US chip companies in the same period.
The statistics released by the Semiconductor Industry Association show that the growth of the Asian market has contributed to the increase in sales revenue of the global chip industry. It is estimated that the sales revenue of the global chip industry will increase by 33% year-on-year to more than US$300 billion.
Brian Toohey, president of the Semiconductor Industry Association of America, said: "The development of the US chip industry is quite mature and its cost is huge. The future competition in this industry will be very fierce."
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