Semiconductor Industry Accelerates Change Amid Shortages... Startup Investments Also Rising ↑

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Amid a global semiconductor shortage shaking up industries such as the automotive sector, the semiconductor industry is rapidly evolving to meet a new era, according to an analysis. Investors are flocking to the semiconductor industry, seeing its future potential, leading to rapid transformation and growth across the entire sector, including related startups.

The New York Times (NYT) reported on the 7th (local time) in an article titled "Despite Semiconductor Shortages, Semiconductor Innovation is Rapidly Advancing" that "Venture investors, who traditionally avoided semiconductor manufacturers, are now providing massive funding, ushering in a new era of remarkable creativity across the semiconductor industry, from large corporations to startups."

According to CB Insights, more than $12 billion (approximately 13.5 trillion KRW) was invested last year in 407 semiconductor-related companies. Investors had previously criticized semiconductor companies for being "too costly," but this trend has changed. NYT explained that this amount is more than double the investment received by semiconductor companies in 2019 and about eight times that of 2016.

NYT mentioned that global semiconductor giants such as Taiwan's TSMC, Samsung Electronics, and IBM are making significant efforts, while semiconductor-related startups are also showing growth. The NYT introduced that Cerebras, a U.S. AI processor supply startup, received $475 million, and Groq, a startup founded by a former Google AI semiconductor designer, secured $367 million in funding. Jim Keller, a semiconductor designer currently working at AI semiconductor startup Tenstorrent after stints at Apple, Tesla, and Intel, described this as an "incredible miracle," noting that "hardware startups were not possible even 10 years ago."

With forecasts suggesting the semiconductor shortage will continue through 2023, technologies driving increased semiconductor demand?such as AI, autonomous vehicles, and the Internet of Things (IoT)?are rapidly developing and advancing. This has strengthened expectations that the semiconductor boom will be a long-term cycle rather than a short-term phenomenon. Handel Jones, CEO of U.S. consulting firm IBS, predicted that total semiconductor industry revenue will steadily increase from $500 billion this year to $1.2 trillion by 2030.

NYT stated, "This growth trend could fundamentally change the industry," and reported that companies like Apple, Amazon, and Google are directly engaging in the production of specialized semiconductors. It revealed that YouTube internally developed its first semiconductor to accelerate video encoding, and Volkswagen recently announced plans to develop processors for autonomous vehicles. Pierre Lamond, a venture investor who has been investing in the semiconductor industry since 1957, told NYT, "Semiconductor design teams no longer work solely for traditional semiconductor companies," adding, "They are creating new aspects in many ways."