Despite all the arguments, the semiconductor industry is maturing. The VC are looking for returns on their investments that the semiconductor industry probably can no longer supply. The investments are too large and the competition reduces the odds of success.
"Rising design complexity is a valid issue in this context, except that one easily finds a huge number of design opportunities which are not billion-transistor scale. Has he heard of wireless sensors, mobile medical, embedded computing, etc. etc. (you see I didn't even use the IoT buzzword...)?"
Excellent point Jayna. All too often, people overlook the fact that the semiconductor market is far more than just the latest multi-billion transistor processor. The world outside of the processor is still an analog one, and those applications you mentioned, and others, will continue to require new designs and new silicon to sense, to control and to communicate beyond the boundaries of the big digital processor.
The IEEE is organising a panel session on this very important topic at the International Solid State Circuits Conference (ISSCC) February 11th in SF. The panel includes Venture Partners from Tallwood (Dado Banatao), KPCB (John Doerr) and August (Andy Rappaport). We also have CEOs from Broadcom (Scott McGregor), Cypress Semi (TJ Rogers), ARM (Simon Segars) and others. See www.issccpanel.org for information on this panel, the topic and the panelists. Attendance is free for IEEE members.