The global computer chip shortage is not just causing headaches for laptop- and smartphone-makers. It also appears to be pushing significant venture capital dollars into a space often shunned by investors fixated on the next big software play or social app.

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Already this year, chipmakers and designers have hauled in massive venture funding rounds, as a combination of factors have thrown the industry into disarray.

In April, Palo Alto, California-based Hệ thống SambaNova, a hardware and integrated systems developer, raised a $676 million Series D at a $5 billion-plus valuation. That same month, Mountain View, California-based tiếng kêu, an AI chipmaker, closed a $300 million round co-led by Quản lý toàn cầu Tiger và Vốn D1. And on May 20, Toronto-based startup chip designer Tentorrent announced it had raised $200 million at a $1 billion valuation.

Those in the industry say the new interest is due to a push to find a differently designed chip that can handle new, AI-driven, data-heavy workloads while the industry grapples with a shortage brought on by an increased demand from new verticals that rarely needed silicon in the past — such as automotive — and uncertainty due to the COVID-19 pandemic.

The global chip supply shortage is so severe, it’s reached even the highest levels of government. In March, President Joe Biden said $50 billion of his proposed $2.3 trillion infrastructure spending plan would go to address not just the semiconductor shortage, but to also shore up the supply chain of chips in the future by bringing more R&D onshore — including possibly building modern foundries in the U.S.

Supply chain changes

Although the shortage continues to garner headlines, those familiar with chips say this is rather par for the course in the semiconductor industry.

“The idea of an imbalance is not a new thing,” said Greg Reichow, a former executive at Tesla and now a partner at Palo Alto-based Nhật thực mạo hiểm who invested in Tenstorrent. “It’s been like this forever.”

Reichow said equilibrium between supply and demand is something only momentarily achieved in the chip world. While the rise of large foundries like TSMC và Samsung brought price reduction to the space, it also increased risk to a sensitive supply chain, he said.

“It created a less flexible chain,” Reichow said.

The money pouring into the industry now represents an attempt to create a little more flexibility. Since new foundries are not going to spring up overnight, more focus is being brought to chip design, as more optimized chips can lessen the numbers needed for devices and appliances.

More data and AI

Roger Hsu, investment manager at ARM IoT Capital Partners — an early-stage-focusing VC sponsored by British semiconductor company nắm giữ cánh tay — said there are three factors contributing to the shift of the current computing architecture: The huge amount of data in the world; more devices connected together; and AI/machine learning, which is spurring the need for smarter and more efficient chips.

“As we are familiar today, there is more data generated in one year than the past decade in total,” he said. “Computing architecture originated in (the 1970s or 1980s) for more of a generic purpose, and didn’t anticipate nor build for such huge amounts of data whether in processing, storage or data transmission, and that will just grow exponentially each year.”

Such a change can’t be addressed by the software layer alone and without adjusting the fundamental semiconductor hardware level, Hsu said.

“Which is why we see so many, and even internet titans and automakers, who might not consider to be that directly related to semi, nowadays starting to build their silicon partners or even build their own chips,” he added.

Jim keller — a top chip designer who has worked at Apple , AMD, Tesla and Intel, and now serves as CTO and president of Tenstorrent — agreed that while undoubtedly COVID-19 disrupted the supply chain, one of the bigger problems the industry is facing is the changing workloads needed.

Chips designed decades ago for servers that never imagined today’s evolving AI and machine learning, have issues keeping up with next-gen workloads. That creates the need for more compute power and more chips — helping drive the shortage.

“There’s just a shift in the workloads,” Keller said. “Once upon a time those Intel chips were fine. But with AI/ML, you need something else.”

“The AI wave is just so pervasive,” Reichow added.

New industries

While more chips are needed for the higher levels of computing in today’s world, there also has been a wide expansion of industries needing silicon.

“Who would have thought a carmaker needs chips?” Reichow jokes.

Có trụ sở tại Đài Loan eYs3D Vi điện tử, a silicon-centric fabless design house, raised a $7 million Series A from strategic partners like ARM IoT Capital last month to push its chip design for the exploding robotics industry.

James Vương, eYs3D’s chief strategy officer, said the market for cleaning robots alone has grown 20 percent to 30 percent just since the pandemic started as companies try to combat a labor shortage. The growing market for things like robotics has brought more venture capitalists sniffing around the space, he added.

“Overall, yes, VCs are looking more at the space,” he said. “There’s just so many new markets — robotics, facial recognition,” he said.

Reichow, who has been investing in hardware for years, said the semi industry was “a pretty lonely field” for investors just five years ago. However, in more recent times, he said he has seen a surge in what is now called “frontier tech” and “deep tech.”

“People are looking for the next big shift in infrastructure,” he said.

Wang said investors are seeing tremendous potential in the space as some of the biggest tech giants in the world are looking for silicon. đàn bà gan dạ could eye the space to further push compute and logistics initiatives, while Facebook would be interested in its application for the virtual reality plans it has had for years, he said.

Interest from the likes of Facebook, Apple and Amazon only will bring more venture capital into the space as investors seek big exits.

Already this year the space has witnessed significant deals. In January, Qualcomm acquired Santa Clara, California-based đám mây for $1.4 billion. The startup, founded by former Apple employees, develops processors for compute-intensive workloads and had just raised a $240 million Series B last September.

More big exits and large rounds could be in the future for chip makers and designers as more data, heavier compute workloads and even a pandemic bring more challenges to our tech-enabled world.

“New challenges represent opportunities,” Hsu said. “Wherever there is a bottleneck, lies the need and potential which investment could unlock in the semiconductor space.”

Notable funding rounds

Some of the largest venture funding rounds in the U.S. semiconductor industry in the last year include:

• Palo Alto, trụ sở tại California Hệ thống SambaNova announced a $676 million Series D at a $5 billion-plus valuation in April. The company develops hardware and integrated systems.

• Mountain View, có trụ sở tại California tiếng kêu raised a $300 million round in April. The company designs AI chips.
• Santa Clara, trụ sở tại California đám mây raised a $240 million Series B last September. The company develops processors for compute-intensive workloads. In January, the company was acquired by Qualcomm với $ 1.4 tỷ.
• Austin, Texas có trụ sở Ambiq Micro secured more than $127 million last October. The semiconductor manufacturing company develops mixed-signal solutions for wireless electronics.
• San Jose, California Chất bán dẫn Credo raised a $100 million Series D in June of last year. The company designs semiconductor solutions for the data center and 5G wireless markets.
• Pasadena, California-based Rockley quang tử secured $65 million in January. The company manufactures photonics chips and custom integrated packaged products.

Hình minh họa: Dom Guzman