Silicon valley is losing interest in semiconductors.

Silicon valley investors are no longer interested in semiconductors and are moving heavily into software, bloomberg reported.
At the same time, Chinese companies, buoyed by government incentives, are investing more and more in semiconductors.

American investors are pouring money into social networking sites, e-commerce and online game companies, but investing in chip factories is at its lowest level in nearly 12 years.

The problem lies in the industry's expensive initial costs, which push manufacturers to set up factories in countries that offer preferential rates and government subsidies.
On the other hand, the initial cost of starting a software or web company is getting lower and lower with the spread of cheap web applications and services.

Ken Lawler, a partner at Battery Ventures, said that while there was no shortage of new ideas in the semiconductor industry, it was getting harder to find investors.
The time and cost of implementing the idea is too high.

The mainland is very different.
The Chinese government's semiconductor focused construction program has given it increasing influence in product design and innovation.
China's global share of chip-related patents climbed to 33 percent in 2010, up from 22 percent in 2010, accounting firm pricewaterhousecoopers reported in November.

Matt Cowan, co-founder of Bridgescale, an investment firm, points out that America needs to worry about its global competitiveness.
Venture capital funding for U.S. semiconductor companies fell 36 percent in the first quarter of 2010 from the same period in 2008 to $895 million from $1.39 billion, according to the capital investment institute.

For the first time in 16 industries measured by the NVCA, the share of venture capital invested in chip companies fell to 1.1%, putting them last.
Software companies topped the list at 17 percent.
Investors have poured billions of dollars into social-networking and group-buying sites over the past two years.

Manuel Henriquez, chief executive of Hercules Technology Growth Capital, which lends money to start-ups, said semiconductor companies are not sexy enough to get attention.
Few semiconductor companies are active outside.

In fact, most manufacturers do not make their own products, but outsource to Taiwan.
Taiwan's semiconductor production surpassed that of the United States in 2005 and continues to do so, according to semiconductor industry association SEMI.

Starting in 2009, semiconductor ipos on the mainland surpassed those in the us, according to PWC data.
In 2009, 80 percent of all chip makers invested in ipos in the mainland capital market.
The semiconductor manufacturers association estimates global chip revenue will grow 33 percent to more than $300 billion in 2010, driven by growth in Asia.