"After a compounded annual growth rate (CAGR) of 3% for several years, the last two years have seen a 22% IC growth and R&D spending increased 9.8% in 2017 with an increase in venture capital funding of fabless semiconductor companies" the CEO noted.
Showing a graph retracing the yearly venture capital investments in fabless semiconductor startups since 2000, Rhines pointed that while 20 years ago, the average was circa $2.5 billion, it plateaued to an average of $1.7 billion between 2002 and 2007, then continued to decline to less than $382 over the 2013 to 2016 period. But the graph then suddenly hits $946 million in 2017 and $1.8 billion in 2018.
This is thanks to new entrants in the IC design game, the CEO interprets, IT companies are designing their own chips, automotive companies and it seems everybody wants to design ICs now. As an example, Tesla says it has to go to custom ICs if it wants to keep up with the performance requirements necessary for future autonomous vehicles. In doing so, it will replace general purpose GPUs and anticipates a 10X increase in performance over today's technologies.
But one big driver for new chip designs comes from China with growing government incentives for semiconductor investments. Nearly $120 billion were invested over the last 5 years (of which $20 billion government backed), and China is about to further accelerate the formation of new startups with an additional $47 billion government backed fund, according to reports from the Wall Street journal.
"IC design enterprises in China used to be few" Rhines commented on another graph, until around 2000. The next 10 years on the graph see a solid average of about 500 IC design companies, surging to nearly 1400 today between 2016 and 2018.
"Their size is going bigger too, with 43% having from 100 to 500 employees" said Rhines, noting that by far, the designs of these startups are dominated by domain specific architectures, with AI and Machine Learning largely ahead of the pack (almost by a factor of 3 compared to the nearest domain, Crypto Currency).