Even though there seems to be quite a delay in India's semiconductor manufacturing plans, local experts insist on its necessity for economic growth, technological development, and strategic autonomy. India is one of the largest consumers of semiconductors in the world, with applications ranging from smartphones and computers to automobiles and defense.
In fact, in a recent interview with Digitimes, Sridhar Kaip, CEO of Semiconductor Fabless Accelerator Lab (SFAL) explained that the potential demand is so high that the country's automobile industry alone may take up an entire foundry. Manufacturing from an electronics perspective, specifically within the semiconductor industry, is vital.
"Considering the current geopolitical landscape and other factors, it's clear that it's time for India to invest in this area," Kaip said. "In fact, India needs more than just two or three types of fabs. For instance, we recently analyzed the potential of catering solely to the automobile industry. The findings revealed that a single foundry would be entirely occupied just by serving this sector, leaving no room for other industries."
This demonstrates the immense potential in the market, not only about fulfilling domestic consumption and market needs but also meeting the growing demand for a range of applications. There is a definite need for at least three to four fabs, if not more. Kaip added that in SFAL's view, a minimum of five to six foundries should be made available to adequately serve the Indian market.
"Encouragingly, I've been reading about developments in this area, and it seems that progress is being made," Kaip said. "Driven by the current geopolitical situation and rising demand, we can expect to see tangible results soon."
Creating an ecosystem
SFAL has been instrumental in creating an environment that encourages development of fabless semiconductor companies. The expansion of fabless semiconductor startup companies in India is critical to the country's electronics sector. To ensure the success of these new businesses, it is crucial to provide an appropriate ecology for their development.
"In our discussions, we've identified funding as a key challenge for startups, but there is more to consider," Kaip said. "Often, entrepreneurs have an idea for a product that they believe is unique. However, as an industry body evaluating these ideas, we find that they may not be as innovative as initially thought, until certain parameters are adjusted to better align with market needs."
At times there may be a notable gap in terms of access to market insights and cutting-edge technologies for these early-stage companies. SFAL aims to bridge this gap by connecting startups to the resources they need, both from a product development standpoint and in terms of refining their concepts to create truly unique offerings. By doing so, the organization is able to help these businesses evolve their ideas into market-ready products and foster overall industry growth.
Challenge of funding fabless startups
One of the biggest problems that companies in this segment have been facing is securing the necessary funds. Kaip pointed out that while this issue persists, their efforts are making a difference.
"The situation remains largely unchanged; however, efforts are being made to educate both startups and venture capitalists (VCs) on the benefits of long-term investments in the fabless semiconductor industry," Kaip said. "While the return on investment (ROI) may not be as immediate as in the software sector, a long-term commitment can yield significant value for all parties involved. Recent success stories have strengthened this argument, demonstrating the potential for lucrative returns."
An example that is suggested is that of Sankhya Labs, a startup that was acquired by Tata's Tejas Electronics. Although the company experienced initial struggles, they ultimately achieved success. This outcome has resulted in considerable ROI for their investors, further validating the potential of long-term investments in the fabless semiconductor space.
Final word
Although we are still waiting to hear of concrete plans regarding chip manufacturing in India, experts remain optimistic about the demand and potential. The need for boosting this sector is only going to increase in the coming days as the market evolves with consumer interest.
The fabless semiconductor business in India, in particular, has tremendous growth and development potential. The expanding automotive industry in the country might easily consume an entire fab, illustrating the need for many fabs to serve different markets.
By tackling issues like funding and access to market data and technology, groups like SFAL are working hard to establish an ecosystem that nurtures and promotes fabless semiconductor entrepreneurs. India can hasten the expansion of its semiconductor industry, supporting economic growth, technological progress, and strategic autonomy, by focusing on long-term investments and learning from success stories.
