TSMC-Backed U.S. Fund Targets Chip, Robotics, other Hardware Startups

 

[ABS News Service/10.06.2024]

Taiwan Semiconductor Manufacturing Co. (TSMC) and major U.S. venture capital firm Kleiner Perkins are among investors backing a new $300 million fund that targets manufacturing startups, such as chip and robotics makers, amid the trend of supply chain onshoring.

Wen Hsieh, a managing partner of Matter Venture Partners, which manages the fund, spoke to Nikkei about investment targets and strategy. Hsieh was a former partner at Kleiner Perkins.

Kleiner Perkins, a leading Silicon Valley venture capital firm, has propelled the rise of tech companies like Google and Amazon with its financial backing. Hsieh, who joined Kleiner Perkins in 2006, was behind investments in major Chinese drone manufacturer DJI and U.S. fuel cell manufacturer Bloom Energy.

Hsieh explained that there are increasing investment opportunities in the "hard tech" -- or hardware -- sector, citing growing demand for semiconductors and robots and the increasing need for energy-saving technologies with the spread of generative artificial intelligence.

This comes as geopolitical factors such as intensifying U.S.-China tensions spur the onshoring of manufacturing.

Hsieh said that each of the trends he cited was "a trillion dollar opportunity."

TSMC and Kleiner Perkins are participating as major investors in the new fund. Other investors include a U.S. subsidiary of Japanese general trader Sojitz, the investment arm of the Singapore Economic Development Board and Middle Eastern family offices, according to Hsieh.

Hsieh signaled his interest in Japan, calling it a "very important piece of a semiconductor electronics supply chain."

He added that companies like Sony Group, Murata Manufacturing and Rohm Semiconductor are providing "very critical building blocks" in the electronics hard tech supply chain.

Hsieh said he would "love to know these organizations, and be part of their future roadmap."

"Japan has an amazing market in both size and the willingness of Japanese customers to adopt new technologies, particularly robots," he said, adding "there's tremendous talent in Japan." Hsieh also sees Japan's low interest rates as an advantage.

To facilitate collaboration with Japanese companies and cultivate the market, Hsieh has appointed Mark Kojo, founder and former president of chip and electronic parts distributor Chip One Stop, as the fund's Japan representative.

While at Kleiner Perkins, Hsieh handled an investment in U.S. robotics startup Dexterity, which began trials in 2023 at domestic logistics centers with the cooperation of SG Holdings -- owner of package deliverer Sagawa Express -- and Japanese robot manufacturers.

Hsieh sees the widespread adoption of AI as an opportunity. "I'll tell you, it is, in my view, easier to go from hardware to software than software to hardware."

Japanese robotics companies "must realize that customers no longer want to buy hardware, they want to buy solutions. And the solution is hardware plus software plus AI," he said.

The new fund comes amid growing difficulties for U.S. venture capital firms to invest in Chinese startups given heightened tensions between the two countries. It is also increasingly difficult for startups to enter China in advanced fields like chips and AI.

Matter Venture Partners has not accepted investment from Chinese companies for its fund, and there are no Chinese startups among the eight companies it has already invested in. Hsieh said that Kleiner Perkins has also historically not received investment from Chinese companies.

He pointed out that "hard tech companies in the world, including ones in China, are now more sensitive to the geopolitics. So you will see Chinese companies wanting to establish a supply chain outside of China, for the rest of the world market."