Mapping India’s chip design ecosystem

Subject: Science and Technology

Section: Awareness in IT and computers

Context:

As part of the second phase of the design-linked incentive (DLI) scheme for the domestic semiconductor industry, the Indian government is considering a proposal to pick an equity stake in domestic chip design-making companies.

Domestic chip industry scenario:

India has a highly-skilled talent pool of semiconductor design engineers, who make up about 20% of the world’s workforce.
About 2,000 integrated circuits and chips are designed in India every year.
Global players operating R&D in the country include Intel, Micron and Qualcomm among others.
The cumulative annual revenue of domestic semiconductor design companies is meagre at ₹150 crore.

Design Linked Subsidy (DLI) scheme:

The DLI for chip designing introduced in December 2021 endeavoured to indigenise innovations.
DLIs form part of the broader catalyst SemiconIndia futureDESIGN initiative.
It aspired to grow at least 20 companies in India scaling a turnover of more than ₹1,500 crore in the next five years.
For product design, the scheme will reimburse up to 50% of the eligible expenditure to a ceiling of ₹15 crore per application.
The deployment-based support, meaning using it in electronic products, extends the incentive by 4-6% of net sales turnover at an upper limit of ₹30 crore per application.

Challenges in the establishment of semiconductor manufacturing unit:

Capital intensive sector
Issue regarding the Intellectual Property (IP) rights.
Upscaling of manufacturing capabilities and equipments
High level research and development
Returns from investments are not immediate
As chipsets become smaller and functional requirements from them change, research and development become challenging.
Supply chain disruptions.
The lack of venture capitalists in the private sector focused on semiconductors in India.