Why Govt Needs To Include Indigenous Large Firms In Chip Designing

Large indigenous chip design companies can achieve better economies of scale that would give an edge with respect to the cost competitiveness of chips

- SHRABONA GHOSH

India has a strong presence in semiconductor design, approximately 20 per cent of the global integrated circuit (IC) design talent (estimated to range between 100,000 to 125,000) is here and India designs around 3,000-4,000 ICs each year. A significant initiative by the government of India, distinct from talent development but crucial for promoting product development, is the design-linked incentive (DLI) scheme. Currently the scheme supports startups, however, the government is mulling on to extend the scheme under the second phase of the India Semiconductor Mission (ISM) to large indigenous companies. The government is also likely to boost the fiscal outlay under the semiconductor incentive scheme 2.0 and it is expected in the next three-four months.

"Boosting the outlay for indigenous chip design will increase the benefits of schemes such as DLI to more MSMEs and startups – encouraging diversity in the ecosystem. However, MSMEs and Startups alone may not be able to drive India's IC design aspirations. Furthermore, the increased outlay could further accelerate the entry of India's legacy IT giants into IC design. We are already witnessing major IT firms enter this niche domain in India, the number could increase soon with additional support. Currently, India's design ecosystem is estimated to generate around USD 300-350 million revenues per year. This number can increase significantly with major players expanding their operations in India," said Sujay Shetty, MD, ESDM & Semiconductor, PwC India.