Investment in fabless chip companies dries up in Korea 

Investment in fabless chip companies that design semiconductors continue to drop in South Korea.

TheElec talked to multiple sources in the country’s fabless scene __ all voiced their concern that spending in the sector by funds is drying up.

A CEO of a local fabless chip firm said that the investment flow this year has been not good.

Government-backed funds that were supposed to be created by now have not materialized due to this, they said.

When the CEO founded his company, financial institutes were willing to spend hundreds of thousands of dollars.

But as they plan to scale, the company had been less fortunate in securing funding, the CEO added.

Government fund Korea Venture Investment conventionally invest in venture capitals, and these capitals in turn secure additional private funds to create their own funds.

But the global economic downturn has caused such investments to drop starting in the second half of the year.

South Korea’s SME ministry said venture investment dropped 40% year-on-year during the third quarter to 1.25 trillion won.

Only 22 companies secured over 10 billion won in funding, half of last year’s 43 companies.

Korea Venture Investment, in its survey of 684 people working in the VC sector, said nearly half of them expected investment volume to drop in 2023 compared to this year.

An executive of a South Korean chip design house company said that investments were focused on trends such as AI or companies with existing revenue.

Another CEO of a different fabless chip company said the government’s policy so far has failed on all fronts such as investment, verification, and software tool support.