Open Source Opens Funds for Semiconductor in India

RISC-V and ChipIn have brought in a lot of deep-tech investors to the semiconductor industry
Open Source Opens Funds for Semiconductor in India
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Recently, the minister of state for MeitY Rajeev Chandrasekhar, said that this is the perfect opportunity and time to enter into the semiconductor chips design ecosystem. He was speaking at the third futureDESIGN Roadshow held under Semicon Design Linked Incentive (DLI) Scheme held at IIT Delhi. 

The participants at the conference included global semiconductor startups and deep-tech VCs looking to invest in the space. At the conference, Chandrasekhar awarded two semicon companies – Morphing Machines, a fabless design company, and Netrasemi, for AI chipmaking. In February, Chandrasekhar announced the launch of ChipIn, a centralised centre for chip designers across the country. This was along with the open-source hardware system RISC-V, which is being used by most of the startups currently in the space.

India has broad expertise

“RISC-V is driving the creation of new startups,” Gani Subramaniam, senior partner at Celesta Capital told AIM. “In fact, we are seeing RISC-V startups getting funded in India. But India is far more versatile than just limiting it to RISC-V or AI. India has the ability to build world-class analog and RF chips, communications ICs, and more,” he added. 

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Even though we are seeing a lot of investments in the semiconductor space with open source technologies like RISC-V, India has the industry shaped up for much more offering than designing chips for AI. Subramaniam explains, “Much of this [chip design] talent is currently residing within large global corporations and building world-class chips on their behalf, but I expect many entrepreneurs will enter this space as more investment capital is becoming available.”

Most recently, Incore, a fabless-semiconductor startup, building RISC-V-based processors raised $3 million in seed funding from Sequoia Capital India. In February, the investors poured funds into MindGrove Technologies as well. This Chennai-based startup secured $2.3 million in seed funding, with Speciale Invest and Whiteboard Capital also pouring funds for building systems-on-chips (SOCS) in India. 

India might go global

We are already witnessing a lot of startups raising funding that are mostly being born out of the startup incubator at IIT-Madras. The trend to invest in semiconductor startups has just started. Subramaniam said that India is poised to be a hub for innovative chip companies to serve both the global market and the massive Indian domestic market as well.

India has numerous inherent advantages as it looks to become a hub for chip innovation, including its deep talent pool, thriving startup ecosystem, rapidly rising technology adoption, and strengthening infrastructure. “India now has over 25 years of deep semiconductor design experience and is the second-largest global pool of engineers and scientists,” added Subramaniam.

He explains how Indian startups will fall into two categories: One that will produce new solutions for the existing India market. The innovation here will focus on driving down costs, while delivering equal or better performance quality. The second category will be globally focused, leading-edge products in AI and other applications. “In the next 10 years, India will see breakout companies in both these categories. While we talk a lot about processors, many opportunities will also be in power management, battery management, motor drivers, smart cards, and other applications,” explained Subramaniam.

More than just a talent pool

Interestingly, India’s reputation as a talent pool for chip design is evident in the presence of R&D centres established by more than 90% of major fab and fabless players worldwide, including Intel, Samsung Semiconductors, NVIDIA, Qualcomm, Micron Technology, and NXP Semiconductors. The concentration of these companies highlights the significance of India’s role in the chip industry.

India has become a sought-after destination for global chip companies to hire exceptional design talent, even though it is not a major hub for silicon manufacturing. Industry insiders estimate that Indian engineers now represent approximately 20% of the world’s semiconductor designers, totalling over 120,000 design engineers. These engineers are predominantly employed by global chip manufacturers, and domestic design companies, or work independently.

Raising funds has been hard

However, not all start-ups have been as fortunate in raising funds, such as Ecvinox, an edge AI SoC venture, and NeuBionix, a medical implant start-up, which faced challenges due to insufficient funding.

Saankhya Labs, a start-up in the chip industry, secured funding from Intel Capital, General Motors, and Sinclair Broadcast Group, among others, accumulating a total of $30 million in funding over 15 years. But according to the founder of the company, these investors were attracted to Saankhya’s technology rather than being traditional venture capitalists. 

Raising capital for chip start-ups in India is particularly challenging, despite their strong potential and competent teams, Muthukrishnan C, CEO of Semiconductor Fabless Acceleration Lab (SFAL), told Business Today.

On the flip side, Subramaniam also said that, “Within India, we see significant potential for the building of fabless semiconductor companies. The government’s chips to startup and design-linked initiative schemes will encourage more startup activity in this space.” Celesta Capital, this US-based VC firm is now keen on investing in semiconductor startups in India. 

Arjun Rao from Speciale Invest told AIM in an interaction about how the company sees more opportunities in the semiconductor industry. The firm plans to confirm at least 8-10 deals in the space by 2024. It is clear that with the push from the government, and the rise of open source fabs in India, the industry is expected to expand even globally, and attract VCs.

Mohit Pandey
Mohit dives deep into the AI world to bring out information in simple, explainable, and sometimes funny words. He also holds a keen interest in photography, filmmaking, and the gaming industry.

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