SANTA CLARA, Calif. – The governments of China and India will each announce plans to pump billions of dollars into their semiconductor industries this year, said Lip-Bu Tan, the chief executive of Cadence Design Systems Inc. and a veteran investor, bemoaning the decline of U.S. venture capital funding for chips.
In a roundtable with tech journalists before his keynote at the annual CDN Live event here, Tan shared his opinions on the lack of startups, the rising cost of chip design and the need to reposition the EDA industry for growth.
“China and India are pouring money” into semiconductors and “the U.S. government should do the same,” said Tan. If it doesn’t, some day U.S. engineers “will have to go to China to work, and its painful to see your kids go to the other side of the world,” he said.
Tan said the U.S. was once home to as many as 30 VCs active in semiconductors, but now has five or fewer, including Walden International, Tan’s own company that has many investments in the U.S. and China. “It’s very alarming for me personally to see, so I am trying to reverse the trend,” he said.
“If the VC trend is not reversed, innovation will be threatened, so it’s important to see more startups funded,” said Tan. “The China and India governments are making semiconductors a strategy industry, but I would hate to see those countries have the most semiconductor companies."
There's money to be made in chip startups, says Lip Bu Tan who hopes to show more examples.
Cadence's board of directors has discussed starting its own internal VC fund, following in the footsteps of larger companies such as Intel and Qualcomm. So far it has resisted what it sees as a risky business outside its core, but it may opt to loan startups design tools they can pay for once revenues come in, he said.
For the past decade, VCs have turned to Internet software and services companies such as Google and Facebook that have lower startup costs and higher return potential than most chip startups. Even Tan has participated in the trend as a member of the board at Weibo, a China social networking site that gained 500 million registered users in two years.
Tan points to Walden startups such as Ambarella as examples of viable chip ventures. With investments of less than $25 million, such companies grow to profitable firms that could be acquired for upwards of $100 million, he said. “If you can demonstrate that, the VC money will come back,” he said.
yes in deed! you can also see how far could be the role of the central government in promoting strategic industries like microelectronics and semiconductors and assisting national science and technology developement, and according to what you mentioned, I think sooner and later the R&D departements will consider more seriously to move their operations or outsourcing to China / India
Ok, one question I want to ask here is china will become like Japan in semiconductor industry were once the former take head to head with US in memory semiconductor and than surpassing US in the market share with superior cost advantage and manufacturing quality than now we seeing number of Chinese companies involve in mobile semiconductor space will this companies also can become like Japan surpassing US in same ways and strategy. Thanks.
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Any money a government "invests" in anything is money the real experts, in the private sector, won't have to invest. I don't mind the government investing in things it is actually responsible for, but when it goes outside its area of expertise, like here, only those who stand to benefit directly can possibly approve.
All those government dollars Tan wants to see invested in his projects are dollars taken from someone else, with likely a more worthy or financially sound cause.
Rick, I would argue, from an investment dollars perspective, that you should include Abu Dhabi's investment in GloFo along with China & India. Since much of that investment has gone to fabs in NY and R&D centers in USA, there is tax breaks given to GloFo is essentially the US governments investment in Semiconductors.
The only way the US will ever help out in any research and funding for semi technology is if it can be applied directly to civilian Drone, Military or privatized Prison uses.
All we need to do is somehow tie in consumer semiconductors to Drones, Missiles or Arizonas private prisons and the semiconductor funding would go thru the roof.
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