MAPPING INDIA'S CHIP DESIGN ECOSYSTEM
CURRENT AFFAIRS FOR 30TH JULY, 2023
MAPPING INDIA'S CHIP DESIGN ECOSYSTEM
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.
The idea behind the DLI scheme is to ensure a stable ecosystem alongside building a few "fabless companies" (entities that design chips but outsource the manufacturing).
The sector is capital intensive and involves sizeable costs in setting up fabrication units, up scaling manufacturing capabilities and equipment and pushing research. Plus, the returns on investment are not immediate as setting up design and fabrication units involves long gestation periods.
NASSCOM says it takes up to 2-3 years before the first product is out. Further, as chipsets become smaller and functional requirements from them change, R&D becomes challenging.
India is a semiconductor destination for global companies primarily because of its highly skilled talent pool of semiconductor design engineers, who make up about 20% of the world's workforce. About 2000 integrated circuits and chips are designed in India every year. Global players operating in India include Intel, Micron and Qualcomm.
However, India owns a much smaller portion of the intellectual property relating to the designs. The DLI, introduced in Dec 2021, endeavored to indigenize innovations. Among other things, it aspired to grow atleast 20 companies in India scaling a turnover of more than ₹1,500 cr in the next five years. For product design, the scheme will reimburse up to 50% of the eligible expenditure to a ceiling of ₹15 cr per application.
DLIs form part of the broader catalyst SemiconIndia futureDESIGN initiative. As per the MEITy Minister over 30 semiconductor design startups have been established in India following the initiative.