News & Analysis
Comment
resistion
Rick, the problem is exactly the idea that consolidation is a must. ...
ajwdct
I was sitting next to Rick when he asked the panelists if any of them were ...
Upbeat VCs have cash for a few good chips
Rick Merritt
11/29/2012 2:15 PM EST
'Selectively' investing in chips
At least two on the panel of five VCs said they are and will continue to invest selectively in semiconductors. Ketan Patel, principal of New Venture Partners (Murray Hill, N.J.), said he has at least four chip startups, two in stealth mode, working in areas such as non-volatile memories and switch fabrics.
“The highest flying IPOs pick one specific component not available as a merchant part, raise the bar in that area and are rewarded,” said Rust. He gave Palo Alto Networks and Fortinet as examples of companies that made “judicious selections of specific components where functionality deserved to be implemented in a custom design.”
“The challenge for investing in semis is the multiples the sector is rewarded with are not as attractive as they were, but I am absolutely still looking a semis,” he said, adding “USVP has had more semi IPOs to date than anyone in world.”
Panelists debated the opportunities SoCs present for server microprocessors. A Microsoft data center manager in the audience said top-of-rack switches could disappear in three to five years as networking is sucked into integrated CPUs.
“Convergence in the data center has many aspects,” said Asheem Chanda, partner at Greylock Partners (Menlo Park, Calif.). “In the last two years, server and storage products have been combined…but it’s still early to see storage, compute and networking in [server] SoCs,” he added.
Hooshmand noted storage, computer and networking technologies change at different rates and may not be suitable for integration in some apps. “What happens to Broadcom or Marvell when some of networking gets absorbed into CPUs,” asked Rust, noting the possibilities for disruption.
Related stories:
At least two on the panel of five VCs said they are and will continue to invest selectively in semiconductors. Ketan Patel, principal of New Venture Partners (Murray Hill, N.J.), said he has at least four chip startups, two in stealth mode, working in areas such as non-volatile memories and switch fabrics.
“The highest flying IPOs pick one specific component not available as a merchant part, raise the bar in that area and are rewarded,” said Rust. He gave Palo Alto Networks and Fortinet as examples of companies that made “judicious selections of specific components where functionality deserved to be implemented in a custom design.”
“The challenge for investing in semis is the multiples the sector is rewarded with are not as attractive as they were, but I am absolutely still looking a semis,” he said, adding “USVP has had more semi IPOs to date than anyone in world.”
Panelists debated the opportunities SoCs present for server microprocessors. A Microsoft data center manager in the audience said top-of-rack switches could disappear in three to five years as networking is sucked into integrated CPUs.
“Convergence in the data center has many aspects,” said Asheem Chanda, partner at Greylock Partners (Menlo Park, Calif.). “In the last two years, server and storage products have been combined…but it’s still early to see storage, compute and networking in [server] SoCs,” he added.
Hooshmand noted storage, computer and networking technologies change at different rates and may not be suitable for integration in some apps. “What happens to Broadcom or Marvell when some of networking gets absorbed into CPUs,” asked Rust, noting the possibilities for disruption.
Related stories:
|
|
|
|
|
Navigate to related information
dylan.mcgrath
11/29/2012 4:03 PM EST
On the surface, this is good news for the chip industry. But I hope the VCs who pledged their interest in backing semiconductor firms aren't just playing lip service to the industry. They've been telling us over and over it's just not worth their bet.
Sign in to Reply
ajwdct
12/1/2012 12:39 PM EST
I was sitting next to Rick when he asked the panelists if any of them were investing in semiconductor companies. Only 2 of them said yes, with only 1 start-up named. That was hardly a great endorsement for IC start-ups, IMHO.
At other VC panels I've attended, there was a great reluctance to invest in IC start-ups due to high capital expenditures required and a relatively long time to gain ROI via exit.
Sign in to Reply
Dave Ferran
11/29/2012 6:29 PM EST
It's nice that the VCs are willing to look at chip technology but what about chipmaking equipment technology? The Bay Area VC community fueled much of the system, sub-system and critical component technology developments in the 70's,80's and into the 90's but then they turned tail and ran. As a result equipment technology is stagnating and innovative products are left stranded after entrepreneurial resources are depleted. This does not bode well for the future.
Sign in to Reply
rick.merritt
11/30/2012 11:54 AM EST
Great point, but with fabs consolidating into fewer hands and critical items like EUV becoming big industry pushes, is there a market for a startup there?
I recall sometime ago Sun co-founder turned investor Bill Joy told me there are opportunities for startups leveraging the infrastructure of what you can do with all that wonderful installed high tech gear.
Sign in to Reply
resistion
12/2/2012 11:46 PM EST
Rick, the problem is exactly the idea that consolidation is a must. Consolidation goes the opposite direction of innovation and funding startups. The infrastructure is choking innovation.
Sign in to Reply
me
11/29/2012 9:31 PM EST
What these zebras are telling you, is that if the grass is green, they will eat it. Well, that is all zebras do.
Thank God one of them did not become the president.
Sign in to Reply
rick.merritt
11/30/2012 11:54 AM EST
I love the image!
Sign in to Reply