National Technology Day: What’s Fabricating In India’s Semiconductor Space?

National Technology Day: What’s Fabricating In India’s Semiconductor Space?


As India celebrates National Technology Day on May 11, let’s understand how the country is all set to emerge as a semiconductor behemoth in the not-so-distant future

India’s efforts towards building a semiconductor ecosystem date back to 1976 when the then Union Cabinet consented to establishing Semi-Conductor Laboratory in Mohali, Punjab.

On the back of the government’s initiatives and the increasing support from VCs, India is now well-poised to realise its decades-long dream of becoming a semiconductor powerhouse

From advancements in artificial intelligence (AI) to streamlining digital payments through the development of the Unified Payments Interface (UPI), and now, endeavours to foster a robust ecosystem within the semiconductor industry, the nation has made significant strides toward establishing itself as a prominent tech hub globally.

As India celebrates National Technology Day on May 11, which has been celebrated every year since 1999 to commemorate the successful nuclear test in Pokhran in 1998, let’s understand how the nation is well poised to become a semiconductor behemoth in the not-so-distant future.

Though the country embarked on the journey of becoming a leading player in the semiconductor industry over 50 years ago, becoming a chip manufacturer has remained almost a distant dream due to problems ranging from poor infrastructure to delayed tech adoption and political and regulatory hurdles.

While today China leads as a semiconductor manufacturer, the acute global chip shortage around 2020 and the US-China conflict led to the realisation of the importance of becoming self-reliant when it comes to semiconductor manufacturing. 

With India’s focus on bolstering its semiconductor industry, it won’t be too long before the country emerges as the next biggest player in this space within a decade, experts believe.

Especially with an existing large semiconductor design ecosystem, having a robust assembly as well as manufacturing capability could be a natural extension for India.

While it is pertinent to note that this industry is highly capital-intensive, increasing support from the government will go a long way in making the country a semiconductor powerhouse.

However, before we go any further, we must understand that the country’s tryst with this ever-evolving realm is nothing new.  

India’s Decades-Old Semiconductor Ambitions Fabricate

India’s efforts towards building a semiconductor ecosystem date back to 1976 when the the Union Cabinet, under the leadership of Prime Minister Indira Gandhi, first granted its assent to the establishment of Semi-Conductor Laboratory (SCL) in Mohali, Punjab.

While the previous attempts failed to yield the desired results, the Centre, in the aftermath of the global chip shortage around 2020-21, realised that it was time for the country to end its reliance on other nations for semiconductors. 

Consequently, the Indian government launched the ‘Semicon India’ programme in 2021, with an allocation of INR 76,000 Cr, to develop a robust and sustainable semiconductor and display ecosystem in the country.

Following this, the Centre set up the India Semiconductor Mission (ISM) as an independent business division within Digital India Corporation to drive India’s long-term strategies for developing the semiconductor ecosystem.

With these initiatives, the Design Linked Incentive (DLI) scheme came into existence. The DLI scheme offers financial incentives and design infrastructure support for various stages of semiconductor development and deployment, including integrated circuits (ICs), chipsets, system-on-chips (SoCs), systems and IP cores, and semiconductor-linked design.

Earlier this year, Prime Minister Narendra Modi also laid the foundation stone for three semiconductor plants worth over INR 1.25 Lakh Cr, which includes the Tata-PSMC chip foundry (INR 91,000 Cr), the Tata OSAT facility (INR 27,000 Cr), and the CG Power-Renesas (INR 7,600 Cr).

Besides, US-based semiconductor giant Micron is also establishing a plant in Gujarat, with an investment of over INR 22,000 Cr.

As India attempts to reach its aspirations of becoming a leader in the end-to-end semiconductor supply chain, there are also reports that the central government is now planning to build a dedicated research and development unit under the proposed India Semiconductor Research Centre (ISRC).

VCs Share The Indian Semiconductor Dream 

The importance of VCs in building a strong startup ecosystem is undeniable, even though these investors have largely given little attention to the Indian semiconductor industry due to the high cash infusion it requires.

However, a lot is changing now, with the Indian government, time and again, reiterating its semiconductor vision for the country. Startups working in the semiconductor designing and assembly space are now garnering increasing attention from VCs.

Inc42’s recent interactions with multiple leading VCs in this space revealed that they are becoming more enthusiastic given the huge scope that lies in front of the Indian semiconductor players, with a leapfrogging electric vehicle (EV) market, growth in the AI computing domain, and rising adoption of consumer electronics.

Peak XV Partners, Speciale Invest, Exfinity Ventures, and Celesta Capital are among the VCs leading the semiconductor investment story.

In the most recent groundbreaking development, Speciale-backed Mindgrove Technologies rolled out the country’s first commercial high-performance SoC called Secure IoT. The chip can be used in smartwatches, smart city devices, connected home devices, and EV battery management systems, among others.

Most VCs today are also extremely bullish on two factors that are driving their semiconductor investment story – India’s talent pool and government initiatives.

“The pool of talent domestically available, which is working on global semiconductor companies, such as AMD, Qualcomm, and NVIDIA, is very strong and from there, we will get the entrepreneurial talent as well. This is what we are seeing in our deal flow,” said Arjun Rao, partner at Speciale.

Meanwhile, commenting on the government’s efforts, Chinnu Senthilkumar, managing partner at Exfinity, said, “I have been observing the (semiconductor) landscape for about 12-15 years, and the latest PLI and DLI initiatives are pragmatic and resonated with many players in India and outside.”

Recently, two Bengaluru-based semiconductor startups – Saankhya Labs and Sensesemi Technologies – were selected under the DLI scheme to receive financial support.

Some of the other leading companies in the semiconductor industry today include Peak XV-backed Incore Semiconductors, Centre’s DLI-recognised Morphing Machines, Celesta-backed Aura Semiconductor, NXP FabCI 2021 cohort qualifier Silizium Circuits, etc.

Home to around 90 startups, the Indian semiconductor ecosystem is set to remain at the forefront of the country’s fast-evolving technology landscape, experts believe. 

As per Inc42’s analysis, the Indian semiconductor market opportunity is set to surge to over $150 Bn by 2030, growing at a 24% compound annual growth rate (CAGR) of 24% between 2023 and 2030.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

Unlock 60% OFF
Cancel Anytime
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

National Technology Day: What’s Fabricating In India’s Semiconductor Space?-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

National Technology Day: What’s Fabricating In India’s Semiconductor Space?-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

National Technology Day: What’s Fabricating In India’s Semiconductor Space?-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

National Technology Day: What’s Fabricating In India’s Semiconductor Space?-Inc42 Media
National Technology Day: What’s Fabricating In India’s Semiconductor Space?-Inc42 Media
You’re in Good company