As the semiconductor industry faces geopolitical tensions and intensifying competition, global venture investment in chip startups took a hit last year. However, U.S.-based semiconductor startups saw a remarkable rebound, attracting a significant surge in venture capital funding.
According to Crunchbase data, global venture funding for semiconductor startups totaled $10.5 billion in 2024 across 415 deals—a 24% drop from 2023’s $13.8 billion. The number of deals also fell by 27%, down from 571 deals in 2023.
Despite this decline, U.S.-based chip startups bucked the trend, securing nearly $3 billion in funding—marking an impressive 123% increase from $1.3 billion in 2023. It was the highest investment level for U.S. chip startups since the record-breaking $3.2 billion in 2021.
Massive Rounds Fuel U.S. Chip Startups Boom
The surge in U.S. semiconductor funding was driven by a series of major funding rounds in the latter half of the year:
- Groq (August 2024): The AI semiconductor and software startup secured a $640 million Series D led by BlackRock, bringing its valuation to $2.8 billion. Groq focuses on optimizing AI processing efficiency to reduce computing power requirements.
- Lightmatter (October 2024): The startup, which leverages light-based technology for AI chip connections and deep learning computations, raised a $400 million Series D from T. Rowe Price. This round nearly quadrupled its previous valuation to $4.4 billion.
- Ayar Labs (December 2024): Specializing in optical data transmission for AI infrastructure, Ayar Labs secured $155 million in a Series D round led by Advent International and Light Street Capital, surpassing a $1 billion valuation.
The surge in investment aligns with the U.S. government’s efforts to expand domestic chip production. Just last week, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chipmaker, announced a $100 billion investment in U.S.-based manufacturing over the next four years.
However, political uncertainties loom over U.S. semiconductor policies. While the CHIPS Act, introduced in 2022, aims to reduce reliance on Asian chip manufacturers, the White House is considering scaling back incentives. Meanwhile, former President Donald Trump has pledged to impose new tariffs to encourage domestic chip production without government subsidies.
China is also ramping up efforts to dominate the semiconductor space. The Chinese government recently allocated $140 billion to boost its domestic tech industries, with a focus on AI and semiconductors.
Two of the largest semiconductor funding rounds in 2024 went to Chinese chipmakers:
- ChangXin Memory Technologies and SJ Semi collectively raised $2.2 billion.
- Other major Chinese semiconductor startups, including Unisoc and AaltoSemi, also secured massive investments.
AI’s Role in the Semiconductor Investment Boom
A key factor driving semiconductor investment is artificial intelligence. AI-driven advancements demand more efficient and powerful chip solutions, making semiconductor startups highly attractive to venture capitalists.
While the chip industry is capital-intensive and dominated by established giants like Nvidia, investors in the U.S. are still betting big on startups that can enhance compute efficiency and AI performance.
As geopolitical and economic uncertainties persist, the semiconductor industry remains at the center of a global power struggle, with venture capitalists watching closely for the next breakthrough innovations.
