Who is funding the chips of the future? Analysis of global semiconductor startup funding activities
With multi-billion-euro investments in new semiconductor fabs and government subsidy packages measuring tens of billions of euros, it is easy to forget that startups play a crucial role in the global semiconductor ecosystem, especially in times when there is a huge demand for innovative semiconductor products that meet the rising compute demands of artificial intelligence. While private and public investors have paid more attention to software startups than hardware startups in the last decade, the last years have seen a flurry of activity in semiconductor startups. But in which countries is this activity concentrated? Where are semiconductor startups emerging, and who is funding them?
A better understanding of the global semiconductor startup ecosystem should be of interest to policy makers who are thinking about long-term industrial policy to strengthen their domestic semiconductor ecosystems. This is especially important in times when most of governments’ attention focuses on the technological competitiveness and market positions of their incumbents, for various geopolitical reasons. Of course, it takes much more than just money to foster a vibrant domestic semiconductor startup ecosystem. Nonetheless, in this quantitative analysis of global startup funding activities in chips, we want to provide a first glimpse at this vital part of the semiconductor value chain. We connect the dots between the geographical distribution of startups and investors and map the activities of startups along the semiconductor value chain.
Our findings provide a basis for better understanding funding activities within the international semiconductor startup landscape by analyzing 1418 funding rounds from 1144 startups in which 2741 investors participated. Even though it is only a first examination of a rather underexposed pillar of the semiconductor ecosystem, we want to highlight some key take-aways that are promising starting points for further analyses: Examining the strategies of investors reveals geographical differences. Our data show that investors from China, the US and Israel tend to focus on their domestic ecosystem (95%, 67% and 92% of transactions go to local startups, respectively), while others, such as investors based in Japan or Taiwan, have a more diverse portfolio. Overall, our analysis of startups activities concludes that China is by far the country with the largest domestic ecosystem and chip design is the process step where most startups, across countries, are active.