Race To fix Semiconductor Chip Shortage
Money Chasing Semiconductor Startups
Source: Semiconductor Stock Images
Global Chip Shortage Is the Driving Factor
Semiconductor startups are very hot. They are the recipients of a flood of investor money rolling into them globally if they have very promising new chips. In 2021 so far, 85 global deals in the semiconductor market have raised $3.7 billion with startups receiving 43% of the money. The reason for the global investor spotlight on semiconductors is the global chip shortage that started in 2020. Experts predict that shortages could continue through 2023 and beyond. The impact is huge. Automakers and technology companies are being forced to wait 5 months and more for chip deliveries which is hampering their global businesses.
Search For Developing New Chip Technologies
What investors are placing bets on are chips that promise more power and efficiency. The chips under development are better designed to the extent that fewer of them are needed to be effective and they need far less power to operate. Investor money is being poured into startups doing R&D to bring these next generation chips to market. Given the environment, the first startups to hit a "home run", will in all probability yield very hefty returns for investors.
The biggest chip deal so far in 2021 is Qualcomm's $1.4 billion acquisition of California based chip startup Nuvia and it is reflective of chip market dynamics. Nuvia is developing chips with significantly better performance and lower power usage. Nuvia says its chips work across industries including smartphones and EVs. For global investors, chips are offering a prime area to watch for opportunities.