South Korea's investment in Fabless companies continues to decline

In South Korea, investment in fabless chip companies that design semiconductors continues to decline. As TheElec reported recently, the agency spoke to multiple sources in the country's fabless space, all of whom expressed their concerns that spending in the fabless space is drying up.

The CEO of a local fabless chip company said that the flow of investment this year has not been good. For this reason, they say, the government support fund that should have been created by now has not materialized. When this CEO started his company, financial institutions were willing to spend hundreds of thousands of dollars. But the company has not been as lucky in securing funding as they plan to scale up, the CEO added.

Government fund Korea Venture Investment has traditionally invested in venture capital, which in turn receives additional private funding to create its own funds. But a sluggish global economy led to a decline in such investment from the second half of the year.

Venture capital investment fell 40% year-on-year in the third quarter to 1.25 trillion won, South Korea's Ministry of Small and Medium Business said. Only 22 companies received more than 10 billion won in funding, half of last year's 43 companies.

Korea Venture Investment said in a survey of 684 people working in the venture capital industry that nearly half expect investment in 2023 to drop from this year. An executive at a South Korean chip design company said that investments are mainly concentrated in companies with trends such as AI or existing revenue. The CEO of another Fabless chip company said that government policy has so far failed on all fronts, including investment, validation and software tool support.