Startups and VCs call for ecosystem for growth of semiconductor industry

Startups and venture capital firms emphasise the need for a strong ecosystem to accelerate the growth of India's semiconductor industry, fostering both domestic and global competitiveness

CEOs and founders of several startups and venture capital (VC) firms on Thursday appealed to the government to build a strong and supportive ecosystem to accelerate the growth of the semiconductor industry in the country.

 

Speaking at ‘Semicon India 2025’ on Thursday, many highlighted how building such an ecosystem would not only strengthen the domestic semiconductor landscape but also position the country as a competitive player in the global market.

 

Vrinda Kapoor, founder and chief executive officer (CEO) of 3rdiTech (pronounced third-eye tech), a semiconductor company, said, “One challenge that we have as we go up against an economy like China is that our ecosystem is still largely fragmented. There (in China), you had an OEM (original equipment manufacturer), different semiconductors that were critical to be able to scale the supply chain, government incentives, and venture capital, all of which were stacked up. You knew your order book for the next five years. As the OEMs scaled, everything else scaled along with them. We need to be able to create at least the first steps of the ecosystem.”

 

Building on Kapoor’s perspectives, Shashwath TR, CEO of Mindgrove Technologies, a fabless semiconductor design startup, said that the country should be able to manufacture complete modules and systems, not just chips.

 

“If someone is making microprocessors and microcontrollers, they don’t need to provide just the chip but also the entire software stack. Will the same company make it or contract it out? There are two ways of looking at it. Either you can build the entire stack in one company, or you can try to build up an ecosystem. So, a lot more dialogue and testing of the waters is needed as to how it can work in the Indian ecosystem,” he said.

 

Nikhil Rajpal, CEO of Hero Electronix, a technology and electronics venture of the Hero Group, said that startups can get impetus and scale from government demand and a push from OEMs.

 

“We need to build companies that can compete with established global firms. So, they must see where the demand is coming from. There are sectors like defense or security, where the regulation has created real opportunities. But one of the ways to grow could be when OEMs, like us, come together and provide some initial scale for them (startups) to be price-competitive,” Rajpal said.

 

Rajpal, however, added that VCs or the government alone are not sufficient to scale local companies and make them competitive.

 

“The real answer is, who has the big volume in India in the corporate ecosystem. We need to find ways to get the ecosystem, work with startups, and take some risks,” he said.

 

Bringing an investor point of view, Som Pal Choudhury, co-founder and partner, Bharat Innovation Fund, said access to capital will be easier once there are some startup success stories in the semiconductor sector.

 

“At the end of the day, VCs are not investing their own money. We are investing our investors’ money. So, it is our fiduciary duty to scan through all and every aspect of deep-tech and give the maximum returnable amount. Given the sheer quantum of startups that are coming in, we need to choose a couple of them, make them successful, and once we have some success stories, more and more capital will flow in.”