India’s Chip Moment Needs System Designers Before the Fabs
By Sanjana Gupta ·
India’s semiconductor story now sits at an uneasy junction between ambition and execution. The country aims to become a leading electronics and chip hub within the next decade. Union minister for electronics and IT, Ashwini Vaishnaw, recently wrote in a LinkedIn post, “We are also developing a clear roadmap to develop 7 nm, 3 nm and then 2 nm chips in India.”
The country also wants to move beyond assembly and packaging and build real design and systems capability at scale. Vaishnaw mentioned that design accounts for 20-50% of a chip’s total value added, an area where India already has sufficient talent.
Most global semiconductor companies run large design centres in India. AMD, IBM, Qualcomm, Intel, Cadence Design Systems and NXP Semiconductors each employ roughly 10,000 to 15,000 engineers here, working on some of their most advanced chips.
“But what we lacked were Indian product companies with their own chip designs,” Vaishnaw added.
According to him, chip design is an expensive and risky business. Even a basic chip can cost between ₹10 crore and ₹100 crore to design in India, with no certainty that it will work. And even if it does, competing and selling in a highly globalised chip market is far from guaranteed.
For this reason, policy attention has largely stayed on fabrication plants, subsidies and state-led infrastructure. Yet, inside the industry, a quieter debate is gaining ground. The next bottleneck may not be capital or land, but system designers who can turn chips into real products.
The limited attention to accelerating this ecosystem in the Union Budget announced on February 1 also reflects this gap. While the government continued to prioritise manufacturing-led incentives, there was little direct support aimed at building system design, product engineering and hardware-led startups that can translate chips into deployable technologies.
Demand Before Fabs
India already holds one of the world’s largest chip design talent pools. Global companies operate major engineering centres in Bengaluru, Noida, Hyderabad, and Pune. Startups are building products in mobility, robotics, medical devices and energy. What remains uncertain is whether the country can connect this talent to full system ownership.
That shift, from chips to complete electronic systems, now defines how several global players see India’s role. One of them is NXP Semiconductors. In a recent interview with AIM, Hitesh Garg, Vice President and India Country Manager at NXP Semiconductors, argues that India’s semiconductor mission must look beyond fabs and focus on demand and system creation.
India’s policy direction, he said, already reflects that wider ambition. “Semiconductor is just part of it. Manufacturing is even a smaller piece. But I think the view, the vision is much bigger,” Garg says.
He further stresses that the sector runs on long cycles, considering it’s not̉ an industry that changes overnight. It requires a longer vision and equally long implementation cycles. For Garg, the more urgent issue is not factory timelines, but whether India can develop sufficient real-world use cases. “That demand creation is even more important than having progress on those factories,” he says.
Why NXP is Reorganising
NXP is restructuring its product strategy to better align how machines, vehicles, and factories operate today. Garg said the company organises its portfolio around four functional layers.
“We call it sense, think, connect and act,” he says.
Sensors and radar handle perception. Microcontrollers and processors perform computation. Wired and wireless technologies enable communication. Control and power technologies manage actuation and energy.
This structure mirrors the changing nature of mobility and automation. Garg framed modern vehicles as intelligent machines. “What is an automotive? It’s a robot on a wheel,” he says.
NXP has also expanded its stack through three recent acquisitions. He emphasised the company’s acquisition of Aviva Links to strengthen wired in-vehicle communication. Moreover, the company acquired Kinara to expand its edge AI capabilities. “Kinara is a company which is building chips for AI on the edge. These are neural processor units,” Garg adds.
Another acquisition, TTTech Auto, added software capabilities for automotive systems. For NXP, the deeper shift lies in how intelligence moves closer to machines. “The real game changers are what we see in front of us, which is AI on the edge,” Garg says.
He argues that many real-world systems cannot rely on remote computing. “If there is a car which is running at 200 kilometres per hour, you don’t have time to go to the cloud,” he says. “Those kinds of decisions have to be taken on the edge.”
Edge processing also reduces network and energy costs, as data doesn’t need to be constantly sent and received from data centres.
The Chip Mission Needs Patience
India has announced multiple fabrication and packaging projects across several states. Garg believes rapid project announcements carry risks if demand does not grow at the same pace. “We want to do 100 things in parallel, but that also brings the right level of risk,” he says.
He questions whether the ecosystem can support that scale and whether all announced plants are necessary. Large capital projects, he says, must still pass basic business tests. But he also defended the current pace of progress. “It only started two years back. So that’s where we need to be a bit more patient,” he said.
State governments are now competing to attract electronics manufacturing and assembly projects. Garg describes this as healthy for the sector. He expects semiconductor activity to spread more widely across the country. “I’m sure in the next five years, you will see that no state is untouched by these kinds of initiatives,” he expresses.
Move to System Ownership
NXP operates multiple engineering centres in India, with Bengaluru being its largest base. The company also runs teams in Noida, Pune and Hyderabad. Garg believes geographic spread matters for a country of India’s size.
“Wherever we see the right talent, wherever we see the right execution happening, we need to have these multiple centre points,” he says.
Across India, NXP currently employs about 4,000 people, including partners. Yet, hiring is not its primary focus. “More than the headcount growth, my focus is more on the capability growth,” Garg describes.
The company’s near-term priority is to deepen system design work inside India. While NXP will continue chip design, Garg says it does not capture the largest economic value.
“My biggest focus this year is how I support more system innovation in this country.”
He illustrates the imbalance using the automotive sector. “In a typical car, my semiconductor component will be in the range of under to $200.” The remaining value, he argues, lies in product architecture, integration and ownership. “How do I work more closely with the ecosystem with this new system innovation?” he ponders.
He warns that a narrow focus on chip production could leave India dependent on imported modules. “Otherwise, we will continue to get those modules which are built in our neighbouring country, and they will be pushed here,” he says.
Garg believes system-led startups already offer a path forward, especially in electric mobility and product-focused hardware firms. “They are the game changers. They are looking, they have the product thinking, and then they are building solutions from scratch,” he said.
For India’s semiconductor strategy, the next stage may not be measured by how many fabs open, but by the number of companies that design, build, and own complete electronic systems.