The growing focus of the Indian government on the semiconductor industry has led to a burgeoning number of chip startups in the country. The proliferation of semiconductor startups can potentially play a significant role in developing India’s semiconductor ecosystem.
“Growing the number of chip-based startups is one driver to attracting the eyes of global semiconductor companies to India, a strategy also done by other national governments,” says Helen Chiang, Asia Pacific semiconductor research lead and Taiwan country manager at IDC.
Role of academia
Of particular significance is the role of academia in the increasing number of chip startups in the country. For instance, the Indian Institute of Technology – Madras (IIT-M), India’s premier engineering institute, started Shakti, an open-source initiative started by the Reconfigurable Intelligent Systems Engineering (RISE) group. It is credited with developing India’s first microprocessor.
Another prominent initiative supported by a prominent institute is Agnit Semiconductors, which is incubated at the Galium Nitride Ecosystem Enabling Center and Incubator (GEECI), situated at the Indian Institute of Science (IISc), a prominent institute. Agnit is the only chip start-up that is developing Gallium Nitride (GaN) semiconductors. Typically, manufacturing GaN semiconductors is not as capital-intensive as other chips. Agnit recently signed a contract with the Ministry of Defence to design and develop GaN chips for wireless transmitters in defense applications.
While India is home to the world’s third-largest base of tech startups, most of these are software-related, which typically requires low capital investment. As per a recent report by NASSCOM, India added more than 1,300 active tech startups last year taking the total number of active tech startups to 25,000-27,000. A whitepaper by the Telecom Standards Development Society of India (TSDSI) says that less than 5% of startups in the country are deep tech startups, while 95% are related to software.
The Government of India has come up with several initiatives to promote chip startups in the country. For instance, recently the Ministry of Electronics and IT (MEITY) announced support for two semiconductor startups, Aheesa Digital Innovations and Calligo Technologies, under the Design Linked Incentive scheme for semiconductor startups. In addition, Chips to Startup (C2S) initiative aims to train 85,000 people over five years in the area of VLSI and Embedded System Design.
Lack of infrastructure and funding
Even as the number of startups are increasing, they face several challenges. There is a lack of an ecosystem for deep tech and semiconductor startups which impacts their growth at every step of the way, be it funding, developing products, marketing or selling. It is possibly for this reason that several chip startups in the country are in chip design, which is unlikely to help the country build a vibrant chip ecosystem. There is a lack of supply chain as most of the components are imported. Further, the country lacks the testing infrastructure required for hardware development.
“However, beyond increasing the number of startups, it will be crucial to build a comprehensive startup ecosystem, which includes government and VC [venture capital] industry to support R&D work/capability. Without a complete ecosystem, attracting substantial funding will be challenging. Currently, Indian startups are more concentrated on vertical industry solutions such as healthcare, finance, AI, and Auto/EV. Monitoring how these sectors synergize with the semiconductor industry is key,” elaborates Chiang.
This is highlighted by chip startups. “Lack of infrastructure and access to funding are the main challenges. We need to develop some kind of system to ensure that semiconductor startups can easily access the required components and hardware,” says Hareesh Chandrasekar, CEO and Co-founder of Agnit Technologies.
“Most of the components are imported even now in India and only the assembly is done here. This means there is a lack of supply chain, which is bound to impact the deep-tech startups. We also lack the infrastructure to test here, which increases the cost for the startups,” says Sunil David, Co-chair of the Digital Communications Working Group, IET Future Tech Panel.
In addition, deep tech startups typically take a long time to break even, which is possibly one of the reasons for the lack of interest from the VCs. Besides, they may not come with a technological understanding of this space, limiting their interest.
Chennai-based Incore Semiconductors is another startup that mentions the lack of funding for deep-tech startups. “Sometimes the venture capitalists are ready to fund but ask us to move outside the US, which is not something we want to do. We want to build a chip company from India,” says GS Madhusudan, Chief Executive Officer at Incore Semiconductors. The company has recently received funding of $3 million from Sequoia Capital. Incore is building Reduced Instruction Set Computer V (RISC-V) processor cores.
What further adds to the challenge is the lack of success stories in this domain. Saankhya Labs, which was recently acquired by Tejas Networks, part of Tata Group, is possibly the only Indian company that has developed its own SDR chipset.
So, even as the number of chip startups continues to grow, it will be some time before they start to make an impact. “It will take some time for the influence of these startups to grow and become tangible,” says Kanishka Chauhan, Senior Principal Analyst at Gartner.
Gagandeep Kaur is an independent journalist and founder of Deepworkz Media Services.