Evolution of new-age startups: India’s semiconductor’s edge

By Sanjay Gupta, Vice President and India Managing Director, NXP Semiconductors

India has become the third-largest startup ecosystem in the world after the US and China as per the Economic Survey 2021-22. During 2020 – 21, India has added three unicorns every month taking the total count to 51, ahead of the UK (32) and Germany (18). More than 14,000 new startups were launched in 2021-22 which leads to a total of 61,400 recognised startups in the country across various sectors.

Leveraging new-age technologies such as artificial intelligence, the internet of things, data analytics, big data, robotics, etc. several startups are working towards new innovative ideas, products and services which can support today and future use cases for the enterprises and consumers.  It has been anticipated that initiatives on 5G, public digital platforms, semiconductor design, electronics and telecom manufacturing, and even railways can lead to a more than fivefold increase in the number of unicorns.

Semiconductors are essential component of electronic devices, enabling advances in communications, computing, healthcare, transportation, clean energy, and countless other applications and companies. And to fill in the demand, startups are coming forward in solving the technological problem through their business model. 

Government’s support for startups in the semiconductor industry 

The Indian government has come up with several initiatives to achieve the vision of Aatmanirbhar Bharat and position India as the global hub for Electronics System Design and Manufacturing. The vital step towards this vision was to approve INR 76,000-crore scheme to boost semiconductor and display manufacturing in the country.

Under the scheme for holistic development of semiconductor and display manufacturing systems, the policy supports silicon semiconductor fabs, display labs, compound semiconductors, and modernisation and commercialisation of the Semiconductor Laboratory (SCL). The scheme has showcased that manufacturing units or fabs are no longer considered liabilities but increasingly seen as assets if positioned in the right way — especially for contract chip manufacturing.

India should focus on chip design as Indian firms already provide mostly low-end chip design services for third parties. Over 2,000 chips are designed in India every year, with over 20,000 engineers involved in their design and verification. With proper support, such as preferential access to a domestic market, India could build a thriving, cutting-edge local fabless chip design industry. 

Hon’ble Prime Minister Narendra Modi has also stressed on ‘Make in India’ initiative, calling for sustainable and qualitative manufacturing in the country as this is “an opportunity to show the world our manufacturing power.” 

To fulfill this, the companies are making initiatives in developing Outsourced Semiconductor Assembly and Test (OSAT) and Assembly, Test, Marking, and Packaging (ATMP) industries, which are then delivered to ATMP houses that assemble the chips and create working electronic systems. Combined, design, OSAT, and ATMP represent over 50 per cent of semiconductor supply chain revenue. To develop these innovative products and services in uncertain circumstances, tech startups are emerging to contribute with their innovative technologies that focus on manufacturing such units in India, these startups are building semiconductor Fabless Accelerator Lab like power electronic transistors or chip design, IP design, design services, and chip design tools which can create over one lakh new jobs either directly or indirectly as per government estimates.

Creating ripple effect

India’s changing reforms and policies towards start-ups and various government initiatives have helped the Indian startups scale. According to Deloitte Global, venture capital (VC) firms globally will invest more than US$6 billion in semiconductor companies in 2022. That may only be two per cent of the US$ 300 billion-plus of overall VC investment expected for 2022 but it would be second only to the remarkable 2021 figure of an estimated US$ eight billion, and more than three times larger than it was every year between 2000 and 2016.

The government has also assigned 10 Sectoral Group of Secretaries (SGOS) to create a road map for ‘India’s space in the world in 2047’. These include sectors like agriculture, commerce, infrastructure, industry, urban landscape, security & defence, technology, and governance where new-age technology has also been identified as an important area of work. SGoS are making effort in positioning India as a leader in such sectors within the decade and incorporate a framework to leverage technology across all sectors. It will also give impetus to US$ five trillion economies as startups and industries are inducing demand, generating jobs in all the sectors. 

Conclusion

New startups are emerging to accelerate the growth of the overall technology industry in India, with an increasing interest in the semiconductor market. There is phenomenal potential for startups to help accelerate the success of semiconductor industry in India with the increasing incentives and government support.  Many semiconductor MNC’s are also helping start-ups to bring forward talent and innovation through their accelerator programs and at NXP India too we are also contributing through programs like Tech Startup Challenge and Semiconductor Startup Incubator and Accelerator Program that provide them access to mentors, tools, resources, and operational support.

Startups can create a lot of stimulating opportunities for the country, and we need to encourage them by incentivizing in all necessary areas to make help them pioneer new innovations. The government is also making every possible effort in attracting start-up’s attention to help build a self-reliant and sustainable semiconductor ecosystem in India.