Ajai Chowdhry, chairman of EPIC Foundation & MGB, National Quantum Mission of India, believes that despite significant recent progress in India's semiconductor sector, the country continues to overlook its strongest advantage - chip design.
In a recent conversation with DIGITIMES Asia, Chowdhry, who is also the founder of Indian IT firm HCL, pointed out that the country is not playing to its strengths.
"Ironically, India's strength lies in semiconductor design rather than manufacturing, yet we've overlooked aggressively nurturing hundreds of fabless companies," Chowdhry said. "This is crucial, given our extensive design capabilities being used globally."
India, he said, already hosts a considerable talent pool working within global capability centers (GCCs) and major software companies such as HCL. However, these skilled professionals seldom venture independently due to limited local incentives.
"I find it very strange that we have not paid enough attention to creating hundreds of fabless companies," Chowdhry remarked. "The capability is sitting with lots of software companies, including HCL and several GCCs. We need an aggressive plan to get startups and entrepreneurs to leave these companies and set up their own fabless ventures."
He suggested that a more decisive push, supported by targeted funding and policy support, is urgently needed.
Problems with existing incentive schemes
One critical bottleneck Chowdhry identifies is the slow and inadequate nature of India's current Design Linked Incentive (DLI) scheme, which he argued has failed to meet industry needs effectively.
"The DLI scheme is inadequate, offering only up to 30 crores per chip, with a slow approval process - just 17 applications approved over three years," Chowdhry noted.
His organization, Epic Foundation, has recommended a significant shift in policy.
"Epic Foundation recommended a top-down approach, suggesting a targeted list of 30 essential chips with substantial funding, promoting startups, SMEs, and corporates to produce these chips locally," Chowdhry explained.
He emphasized the strategic necessity of replacing Chinese imports with locally produced semiconductors, pointing to critical security risks from potentially compromised imported chips.
Crucial gaps remain in the ecosystem
Besides concerns about the design sector, Chowdhry pointed out a few other persistent gaps in India's semiconductor manufacturing ecosystem, identifying three major areas requiring immediate attention.
"One is compound semiconductors for power equipment due to our large domestic requirements," Chowdhry said, highlighting the urgent need given India's growing power sector demands.
Secondly, he highlights the critical need for establishing local display manufacturing capabilities. India's electronics manufacturing industry, particularly mobile phones, still relies heavily on imported screens, limiting value addition.
"The third is the need for a research facility to develop our manufacturing processes," Chowdhry says. "Semiconductor Complex could ideally serve this purpose, given its capability for low-volume, high-value products."
Government role crucial in creating markets
Chowdhry suggested that government involvement must extend beyond mere financial incentives. He believes a proactive policy to build markets for domestically designed and manufactured chips is essential for sustainable industry growth.
"The market has to be created by the government. If we don't create the market, this business will not happen," Chowdhry said. "We need to say, 'Okay, if you make this chip, which is required in India, we'll ban foreign chips, and this whole market will go to you.'"
He notes that such deliberate market-creation strategies have already proven successful internationally, particularly in China and the US.
"Creating the market is also a job of the government," he said. "They must create the market because that's how countries like the US and China succeeded. When you give the local market to local companies, you help them scale."
Early successes – a promising start
Despite these challenges, Chowdhry acknowledges that India has made commendable strides in semiconductor manufacturing within a relatively short period, particularly in chip fabrication and OSAT sectors.
"We've made pretty reasonable progress in terms of fabs and OSATs. We are looking at creating five plants, which is reasonably good progress, given the challenges India has faced in finding global partners as a newcomer to this business," Chowdhry said.
He highlighted India's landmark Tata-PSMC partnership, aimed at establishing India's first semiconductor fabrication facility, as a significant achievement.
"Taiwan brings the right technology, capabilities, and skills to establish our semiconductor ecosystem," Chowdhry said.
Progress in outsourced semiconductor assembly and testing (OSAT) also indicates positive industry momentum.
"The OSAT segment is also progressing well with strong partnerships," Chowdhry added. "Achieving five plants within a couple of years is commendable."
Boosting global partnerships
Chowdhry emphasizes that India's semiconductor ambitions will require strengthening international partnerships and significantly ramping up research and development (R&D) investments.
"The government must also foster relationships with leading companies like TSMC, providing startups better opportunities for tape-outs and collaborations," Chowdhry said.
He cautions against engaging smaller, inexperienced firms, instead urging collaborations with top global players, particularly in the strategically important areas like compound semiconductors.
"For compound semiconductors, we should look at relationships with top companies, not small companies who have no real experience," he said. "We now have Micron and PSMC as good references - this should draw more partners to India."
A vision for stronger global ties
Chowdhry concluded by outlining his vision of a collaborative semiconductor future built around regional alliances, urging India to leverage global shifts toward multipolar semiconductor supply chains.
"Today, the world is becoming unipolar," Chowdhry said. "China is on its own, the US is on its own, Russia is on its own, and Europe as a bloc is trying to now grapple with the situation of being unipolar."
He advocates building an Asian semiconductor alliance involving key nations in the region, including Taiwan, Malaysia, Japan, Korea, India, and Singapore.
"Maybe a good relationship with Europe at one end and a good relationship with four or five countries in Asia will be very valuable to develop an Asia value chain," he said. "These countries, each contributing something, could meet most semiconductor requirements."
Through this combination of local strengths, targeted government support, strategic international alliances, and robust R&D, Chowdhry sees a promising future for India's semiconductor industry—if India fully leverages its unique advantage in semiconductor design.
Article edited by Jerry Chen
