Semiconductor Startups on the Decline

According to a report by Gartner, a leading information technology research and advisory company, semiconductor startups and small private companies attracted over $1.3 billion dollars in funding during the past two years. But the number of startups has fallen significantly in comparison with the earlier years of the decade (see figure). But many opportunities remain, the report says. Wireless connectivity, analog functions (such as power management) and optical technologies are among the most commonly offered products from these companies.

Key findings of the report include:

1. Very few companies have formed in the past three years. This contrasts sharply with the situation earlier in the decade. The rate of startups per year is slowing down.
2. Most of the private companies identified are in the post-startup stage and are funded from ongoing business operations.
3. One third of investments were from larger vendors rather than venture capital (VC) companies. The report assumes that this represents investments in strategic technologies of interest to the larger company.
4. Investment sums ranged up to $74 million and averaged $12.4 million per company.
5. VC firms continue to favor later-stage companies, when they consider funding new prospects.

The Gartner report Market Insight: Private Semiconductor Vendors and Startups, 2011, provides a listing of private semiconductor companies and their offerings, together with details of funding activities.