Luis Arzubi, a general partner at Tallwood Ventures, told EE Times that Sequoia (San Diego) was forced to cease operations despite having working parts and customers because it failed to raise the needed capital to continue. The company and its investors "basically had no choice," he said.

The company's backers are now moving to sell Sequoia, either in pieces or as a whole, Arzubi said.

"It's a fact of life in this [semiconductor] business," Arzubi said. "Certainly the economic situation didn't help."

Sequoia, founded in 2000, had raised about $64 million in venture capital funding over several rounds, according to The Wall Street Journal.

Sequoia gained notoriety in the wireless chip space by offering a multimode transceiver that supported several specifications, including HSUPA, TD-SCDMA, S-Band and GMR satellite specifications.

In addition to Tallwood, other backers of Sequoia included Motorola, Blue Run Ventures, Cadence Design Systems, Gabriel Venture Partners and Hunnington, according to Sequoia's website.

A number of startups have been forced to shut their doors over the past several months, hit by the global recession and a dearth of venture capital dollars. There is fear that many more will follow.

Some believe that venture capital—long a vital component to the semiconductor business—is leaving silicon startups never to return because the costs of bringing a new processor or system-on-chip to market are becoming prohibitive.

Executives from Sequoia did not immediately respond to voicemails seeking comment.