Rajiv Laroia has never had it this good. Around August last year, Qualcomm announced the acquisition of his company Flarion and by January this year, Flarion went into Qualcomm’s fold for $600 million.

Laroia has laughed his way to the bank with the VCs backing him. Thomas L. Rosch, general partner at InterWest Partners says, “I can see the semiconductor industry coming back on its toes. The year 2005 was marked by successful deals and lot of early stage financing.” Rich Redelfs, Managing Partner at Foundation Capital echoes similar sentiments. “Semiconductor Industry has seen a lot of activity. It’s been a robust year for both the VCs and entrepreneurs.”

However, Sumant Mandal, Managing Partner at Clearstone Venture Partners says, “Semiconductor is a cyclical industry and funding is not as good as it was two years ago.” He is probably right. In 104 deals so far this year, VCs invested $1.044 billion while they invested $1.833 billion in this space in 2005, the report says. Mandal quips, “ Not a big deal. In 2005, it did not see much activity as most players got funded before 2005. The next wave of big time investment is a year away, perhaps two-three years away.”

Given the high cost of investment involved in new semiconductor ventures, Rosch believes it to have ebbed the excitement in VCs who would rather wait and see their portfolio companies go public or get acquired, before making new investments.

Mandal says over the last few years, most new investment in the semiconductor segment has gone into networking and that area in general has not seen much iteration as it did some years ago. With its saturation, VCs don’t find any interest to invest in this sector. “The venture capitalist has become cautious now. Why will he continue investing in companies that are building the same products all over. He would rather wait for a good exit opportunity,” says Mandal.