With Micron, Tata Electronics, Kaynes Semicon and others setting up manufacturing and packaging bases in India, the missing piece of the puzzle is the country’s own successful fabless startups that can design, iterate, and take chips to market. The local design-to-local-manufacturing pipeline is almost non-existent in India, the industry experts highlight.
“In the last three months, we’ve seen about 20-25 semiconductor companies. Most of them either under-calculate the amount of capital they’ll need or under-represent the cost,” said 8X Ventures managing partner Chirag Gupta, who has invested in two fabless startups Lightspeed Photonics and Pantherun Technologies.
Highlighting the capital-intensive industry, most VCs hesitate to invest in semiconductor startups because ₹20-30 crore is barely seed capital in the fabless world, say investors with at least an eight-year gestation period requiring core R&D expertise.
Industry experts said the average cost to take a chip prototype to market is $7 million, and while in the US that’s not a big amount, in India, that’s Rs 60 crore for just one prototype that could even fail.
Startups, however, argue that most VCs in India aren’t equipped to evaluate or support deep-tech businesses and end up raising money from international VCs or strategic investors – “people who understand the business.” They say if India wants to build a self-reliant chip ecosystem, it needs to copy China’s depth, not just Taiwan’s fab playbook.
Discover the stories of your interest
