INDUSTRY NEWS

VCs back ICs

Semiconductor industry executives have long been green with envy over the amount of venture capital cash flowing into the pockets of Internet start-ups with high "burn rates" and low profit expectations. Lately, though, the chip industry is seeing green of another sort. A bear tech market and a booming semiconductor industry have fueled a huge increase in the amount of VC money going to young chip-related companies. PricewaterhouseCoopers reports that VC investment in chip start-ups and related tool suppliers grew an astronomical 412% in the first quarter of 2000 over the same period in 1999. Venture capitalists who parceled out a measly $52 million to fledgling semiconductor firms in 1Q99 doled out a generous $266 million in 1Q00. Twenty-seven chip-related firms received venture capital dollars in the first three months of this year. Topping the list of VC favorites is Tessera of San Jose. The 10-year-old chip-scale packaging firm received $29.4 million in mezzanine funds.The amount of money funneled to these firms is still small beer compared with the moolah that venture capitalists invested in Internet-based companies during the same quarter, however. The report says that nearly $11 billion was pumped into the cyberfirms in 1Q00, up from $1.9 billion in the same period last year. Maybe we should make that a small, green beer.

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