FSA reports 1Q fabless funding results

April 9, 2003 – San Jose, CA – The Fabless Semiconductor Association (FSA), a semiconductor trade organization, has announced the results of its 1Q03 fabless funding research. According to the FSA, funding in 1Q03 experienced quarter-over-quarter growth for the second straight quarter, growing 23% to $423.4 million from the $344 million raised in 4Q02.

The last time there were two consecutive quarters of growth in funding was 3Q00 when the dollar amount raised grew to $927 million from $767.7 million in 2Q00, and up from $154.1 in 1Q00.

Thirty-five fabless companies raised $423.4 million in the quarter, the largest total dollar amount raised since 2Q02 when fabless companies closed $429.5 million in funding. In addition, the 35 companies which received funding in 1Q03 represented the most deals closed since 4Q01 when 37 companies received funding.

“The venture capital community is continuing to invest in the fabless space, albeit at lower levels than the past three years,” said Mark Stevens, a partner at Sequoia Capital and a member of the FSA VC advisory board. “Companies that are developing and marketing devices for existing standards and have high-volume prospects are favored in the current climate.”

Fabless deals began slowly in 2003, with 10 companies raising $59.2 million in January. Investors more than tripled their contributions to fabless companies in February, with nine companies raising $182 million and maintained that pace through March, as 16 fabless companies closed $182.2 million. This represented 43% of all funding raised in the quarter, and was the most raised in one month since June 2002 when 13 companies raised $190 million.

Investors also demonstrated a renewed interest in first-round funding during the quarter. In 1Q03, 29% of all funding went to companies seeking their first round, compared to 21% in 2002 and 33% in 2001. However, the average amount raised in first-round deals continued to drop, reaching $5.1 million, compared to an average of $8.3 million in 2002, $8.8 million in 2001 and $15.8 million in 2000.


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