Drop in semicon investment signals soft market

SAN JOSE, USA: The Global Semiconductor Alliance (GSA) has released its Q3 2008 Semiconductor Funding, IPO and M&A Report. This comprehensive quarterly report includes detailed trend analysis, regional breakdowns and end-market breakdowns of semiconductor funding, initial public offering (IPO), and merger and acquisition (M&A) data for fabless companies, integrated device manufacturers (IDMs), semiconductor suppliers and solar suppliers.

The report findings confirm the observation that venture capitalists are investing less in fabless and IDM companies because of higher design costs and consolidation, with the number and value of fabless and IDM funding deals decreasing for two consecutive quarters.

In Q3 2008, 21 fabless and IDM companies raised $231.6 million, a dollar amount decrease of 44 percent quarter-over-quarter (QoQ) and 57 percent year-over-year (YoY). The total number of fabless and IDM transactions closed in Q3 2008 decreased 13 percent QoQ and 45 percent YoY.

When analyzing M&As involving fabless and IDM companies, the volume and value of announced deals accounted for 55 percent and 34 percent of the overall Q3 2008 semiconductor M&A total, respectively.

Key statistics from the report include:

* Thirty-five semiconductor companies (i.e., fabless companies, IDMs, semiconductor suppliers and solar suppliers) raised $511.7 million in Q3 2008, a dollar amount decrease of 4 percent QoQ and 36 percent YoY. The total number of semiconductor deals closed in the quarter decreased 10 percent QoQ and 44 percent YoY.

* As a result of the weak economy and the increased cost and time required to go public, for the third consecutive quarter, the semiconductor IPO market, which includes fabless/IDM companies, semiconductor suppliers and solar suppliers, saw no venture-backed companies go public. However, one semiconductor company did file in Q3 2008, Avago Technologies.

* For the third consecutive quarter, M&A activity continued to decrease with 31 semiconductor M&As (i.e., M&As involving a fabless company, IDM or semiconductor supplier), a decrease of 11 percent QoQ, but a 15 percent increase YoY.