SANTA CLARA, Calif. – A panel of venture capitalists struck an upbeat tone amid business conditions one semiconductor analyst called “dismal.” The VCs said they see signs of recovery, lots of opportunities amid the chaos of change—and they have money to spend on chip startups.
“I think the U.S. economy is on the way to mending quite well,” said Kambiz Hooshmand, founder of incubator Archimedes Labs LLC (Palo Alto, Calif.). “I think in 2014-15 things will look really bright, and if you are an entrepreneur that is your horizon anyway,” he said in a VC panel at the Server Design Summit here.
Market watchers share a similar outlook for the semiconductor industry. Chip sales this year will be down one to four percent, edge up slightly more than that next year and step up the pace of growth in 2014, according to analysts at Gartner, IC Insights and the World Semiconductor Trade Statistics organization. A report from IHS iSuppli called 2012 the "cold winter of the electronic chip market.”
Amid the short term slump, VCs see big technology and market shifts creating opportunities for startups. “It’s one of the most exciting periods to be a practitioner in the IT enterprise sector,” said Chris Rust, a general partner at U.S. Venture Partners (Menlo Park, Calif.).
Although analysts say IT spending is relatively flat, “where the money flows goes into different pockets,” said Rust. “Traditional functional partitions of servers, WANs, SANs and load balancers are being reinvented in real time with Internet scale data centers, virtualization [and other trends spawning] a chaos that has not happened in a long time, creating unsolved problems and opportunities,” he said.
“Every layer of the stack has to be re-written for the emerging mobile/cloud infrastructure taking shape now, so there are more opportunities than ever,” said Hooshmand.