MENLO PARK, Calif.--The desert climate for semiconductor startups saw a new cloud on its horizon as Samsung announced plans to increase funding for component technologies. The $188 billion South Korean giant opened a $100 million seed fund, increased its corporate venture fund to $1 billion and officially opened an office here to help manage its efforts.
In recent years, venture capital has fled to online services and software, where startups need less money and promise larger returns faster. The trend has left many hardware startups, especially in semiconductors, groping for funds.
"Silicon Valley is the epicenter of disruptive forces, and we want to make sure we are part of it,” said Young Sohn, a veteran Valley executive who leads Samsung’s new Strategy and Innovation Center here. “A number of investors are running away from basic science, semiconductors, materials and display infrastructure, but we want to make sure those things are well supported."
Sohn was hired in August to start the center which now has small offices here and in Israel. It plans other offices in cities that may include Austin, Boston and Cambridge, England.
The group will not be an incubator, but act to encourage innovations Samsung can leverage. It also will take a role in acquisitions and provide a bridge to Samsung technologists in South Korea.
The new $100 million Samsung Catalyst Fund will focus on seed investments mainly in component technologies across sectors such as cloud infrastructure, mobile privacy, mobile health, user interfaces and the Internet of Things. A separate Samsung Ventures fund now has more than $1 billion under management, did 20 deals worth $160 million in 2012 and will invest more this year, Sohn said.
"Every year we add more money to the venture fund, and it is probably one of the top three corporate venture funds in America now," he said.
In my opinion a better way to do this is to start an incubation center for semi startups, where anyone with an idea & execution plan will be given free space, low cost access to EDA tools (which is the major part of semi startup costs) & low cost engineering sample manufacturing services from samsung fabs. In return samsung can take a stake in the company or get the first right of refusal when the company seeks an investor.
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