NEW YORK — Venture capitalists are still a bit wary about investing in the semiconductor industry; the number of funding dollars continued to decline over the last year, according to the August edition of the Global Semiconductor Alliance's GSA Market Watch (registration required).
In the last 12 months, there have been 38 semiconductor funding deals, according to the report. They raised $550.1 million, versus the $563.8 million raised in the previous 12 months.
In July 2014 alone, however, two companies -- the Chinese LED chipmaker Lattice Power Corp. and the UK fabless embedded processor company XMOS Ltd. -- generated $106.2 million in funding, or 47.5% more than was raised in June 2014. Funding increased 70.6% from January to July 2014, the report said.
Jessica Alexander, a GSA senior analyst and author of the report, said investor confidence isn't entirely restored, since funding dollars and deals are still down by about half from two years ago and even more from previous years. She admits, though, that it is "stabilizing and even gaining some ground." Semiconductor suppliers "have received nearly 2.5 times more investment year-to-date, and fabless startups have received roughly 50 percent more in investment dollars with nearly the same number of deals."
According to the report, the total number of fabless/IDM deals closed in the last 12 months decreased by 11 from the previous 12 months, and the number of semiconductor supplier deals increased by four. Also, the average value per disclosed deal has jumped from $12.8 million to $16.7 million.
Investor interest is slightly better than a year ago, she said, since more high-quality startups have emerged. In addition, there has been tremendous momentum in the mature semiconductor market, with companies posting strong revenue gains.
"If this trend were to continue through the end of the year, it could result in the first increase in annual semiconductor funding in several years," Alexander said.