Part-1: Introduction

As the founder of Champion Semiconductor (branded as GEOCON), an aspiring tech corporation, I would like to begin by stating that the points listed here are entirely based on my experience with the Semiconductor-ESDM ecosystem. They also reflect my observations on the way humans respond to external stimuli, both individually (like droplets) and collectively as a whole (like the sea).

This article will start from specifying the requirement, challenges, and move towards the solution, and explain my approach.

Needless to say, in this 'Techade' of technological advancement in India, we must prioritize meeting national-centric goals in establishing a semiconductor ecosystem to foster the growth and sustainability of both the mass market and niche domains.

The greatest challenge we face is that we have missed several opportunities and find ourselves falling behind in the race. The bootstrapping of newer technologies and process nodes is happening at such a rapid pace that catching up seems nearly impossible, even with substantial financial and resource investments. One must not ignore that Moore's Law, or rather Moore's observation, is time-dependent. Taiwan, for instance, has dedicated the past 40 years to refining its semiconductor industry, aided by favourable geo-policies, supply chains (and 'orders').

While catching up may be challenging, it is not an insurmountable task, and with the right approach and long-term vision, we can make significant progress.

Realistically, it may take another 10 years before we witness the fabrication of high-end or leading-edge chips in India. It's crucial to recognize that a successful semiconductor ecosystem is not solely reliant on high-end chips. High-end chips only cater to a fraction of the overall semiconductor demand. There are various market segments, such as mid-range chips, application-specific integrated circuits (ASICs), and system-on-chips (SoCs), etc. Perhaps it's time for us to move away from celebrating niche examples and instead focus on building sustainable and profitable semiconductor startups that cater to local needs and gradually expand to serve overseas markets. Merely relying on one or two out-of-the-box examples will not fulfil the national demand. We should silently work on indigenizing the semiconductor supply chain, one step at a time, without getting caught up in unnecessary fanfare. By adopting a grounded approach and emphasizing the long-term sustainability and profitability of our endeavours, we can make steady progress in establishing a thriving semiconductor ecosystem in India.

It is crucial that we democratize customization and availability of semiconductors to a great extent, enabling the emergence of semiconductor-centric ecosystems in a 'desi' style. This will be reminiscent of the markets like 'Lajpat Rai-Bhagirath Place,' catering to the chip needs of both local and overseas businesses in India. A great example to consider is Shenzhen, where fabless semiconductor companies, some as humble as shops, contribute significantly by exporting millions of chips each year to overseas markets. India has always worked its own path towards technology, and that pattern is unlikely to change. We need to foster such ecosystems and encourage local semiconductor entrepreneurship.

Part-2: The National Requirement

The evolution of technology across various sectors has made semiconductors an integral part of India's economic and technological landscape. Currently, the nation's dependence on the global semiconductor supply chain exposes it to various risks, including supply disruptions, price volatility, and technological security threats. To counter these risks and promote national interests, it is essential for India to cultivate a robust domestic semiconductor industry, with an emphasis on mass-market applications.

While niche markets can offer lucrative opportunities for individual startups, it is the mass-market segment that holds the key to national technological independence. Mass-market semiconductor applications cater to a broader range of sectors, including consumer electronics, automotive, telecommunications, and more. By competing in this sector, Indian semiconductor companies can address a larger portion of the domestic demand, thereby reducing the nation's reliance on imported semiconductors. Competing in the mass market also offers other advantages. It can lead to economies of scale, which can help Indian companies become more competitive, both domestically and internationally. It also encourages innovation and technological advancement, as the wider range of applications and larger customer base provide more opportunities for learning and improvement.

The imperative, therefore, is for Indian semiconductor startups and companies to enter and compete in mass-market semiconductor applications within the country. By developing capabilities to produce semiconductors locally, these companies can reduce India's dependence on the global supply chain, bolster the country's technological resilience, and contribute to the growth of the national economy.

Taking part in mass-market semiconductor applications presents an opportunity for Indian semiconductor companies to not only meet domestic demand but also to hone their skills, innovate, and eventually compete on a global scale. It will require substantial investment in research and development, manufacturing infrastructure, and talent acquisition and training. However, the potential benefits - economic growth, technological independence, and national security - make it a worthwhile endeavour.

Furthermore, government support in the form of favourable policies, financial incentives, and initiatives to build human capital can play a significant role in promoting the growth of the semiconductor industry in India.

In conclusion, unless Indian semiconductor startups and companies compete in mass-market semiconductor applications domestically, India will continue to be heavily reliant on the global semiconductor supply chain. Developing a strong, competitive domestic semiconductor industry is, therefore, crucial for India's technological and economic future.

Part-3: Challenges and Solutions

Assuming we have successfully integrated into the semiconductor supply chain and have started our own chip manufacturing operations in India, either through a fabless model or by having an on-site fabrication facility, now, the chip has to sell. What challenges might we encounter?

The solutions described below form the foundation of our startup, and we are gradually addressing them by incorporating them either in our product, way of working and short term / long term business strategy

Global Semiconductor Powerhouses

Established semiconductor companies are widespread, with deeply entrenched ties to various governments. While they may not oppose the idea of a fabrication facility in India, they would likely resist the entry of Indian-made semiconductors, anticipating a potential erosion of their market share.

A direct competition with these entities is a formidable challenge.

Technical / Business Solution:

  • We need to differentiate ourselves by developing unique capabilities or offerings that these established semiconductor companies don't have, thereby giving us a competitive advantage over them
    • Invest heavily in research and development to create products that are not only competitively priced but also technologically superior or unique
  • Chinese Dumping

During the semiconductor shortage, Chinese companies capitalized on the situation by developing replicas of mass-market System-on-Chip (SoC) products. As a result, they secured a substantial share of both the Indian and international markets. These companies employ a strategy of dumping chips at incredibly attractive prices. The mindset of many Micro, Small and Medium Enterprises (MSMEs) in India, which typically aims to maximize profits while minimizing efforts, aligns perfectly with this approach. They are inclined to adopt any solution that accelerates their time to market and reduces costs. However, there are certain challenges associated with these Chinese solutions, including local support, language barriers, and customization issues.

Technical / Business Solution:

  • We need to win over the MSME customer base by improving local support (FAE), offering assistance in quick customization and helping source peripheral components to help them get to market faster.
    • We need to offer a solution which reduces the type of chips in their inventory and can help them develop newer products without changing major component(s).
    • We need to offer a way for them to migrate firmware easily (or without any effort) to the newer chip(s)
  • Global Shortage

The ongoing semiconductor shortage is creating significant challenges for businesses across various sectors. Semiconductors, crucial in many products, from smartphones to cars, are currently in short supply, causing disruptions that extend across industries.

Production Disruptions: The shortage is causing delays and disruptions in production lines, particularly in industries like automotive and electronics, leading to postponed product launches.

Increased Costs and Revenue Loss: With demand exceeding supply, the cost of available chips has skyrocketed. This surge in costs, coupled with production disruptions, is leading to increased operational expenses and revenue losses.

Customer Relations and Innovation: The inability to meet product demand can harm businesses' relationships with customers and their reputation. Additionally, the scarcity of chips can inhibit new product development, potentially stifling innovation.

In summary, the semiconductor shortage poses significant operational, financial, and reputational challenges for businesses, underlining the urgent need for solutions to this global issue.

During the semiconductor shortage, Chinese companies capitalized on the situation by developing replicas of mass-market System

Technical / Business Solution:

  • Develop innovative semiconductor products that offer a high degree of configurability to meet a wide array of use cases.
  • This will not only provide customers with a versatile solution but also allow them to reap cost benefits due to the flexible pricing model.
  • Adaptable semiconductor offerings will afford customers the advantage of maintaining a less diverse inventory, thereby simplifying inventory management and potentially reducing costs further.
  • Price Competition

Indian startups and companies in the semiconductor industry find themselves in a challenging competitive landscape, particularly in terms of price competition. With larger, more established competitors able to leverage economies of scale and lower production costs, competing purely on price can be a daunting task for Indian entities. However, these challenges could open doors to new opportunities

Technical / Business Solution:

  • Rather than engaging in a price war, Indian startups and companies can focus on disrupting the industry by introducing innovative ways of doing things, brought to life through their products.
  • By creating solutions that offer unique advantages - be it superior functionality, greater customization, or easier integration - they can shift the competition from price to value.
  • Moreover, by pioneering new trends and leading the market towards them, these companies can redefine the rules of the game. They can establish themselves as leaders in innovation, setting standards that others strive to follow.

In conclusion, while price competition poses significant challenges, it also provides Indian startups and companies with an opportunity to disrupt the industry through innovation. By focusing on creating unique value and driving new trends, these companies can redefine the competitive dynamics and carve out a unique space for themselves in the semiconductor market.

Part-4: Backward Integration

Field Application Engineering (FAE) plays a pivotal role in the success of a semiconductor startup. It forms a crucial link between the company and its customers, helping to bridge the gap between complex technical products and their practical application.

FAEs primarily serve as technical consultants, providing invaluable expertise and support to customers. They assist in identifying suitable products for specific use cases, troubleshooting issues, and offering custom solutions tailored to customer needs.

Semiconductor startups must have strong expertise in electronics design and development to innovate and differentiate their products. They need to understand the technological needs of the market and develop semiconductors that cater to those requirements effectively. This will not only enable them to compete with established players but also to adapt rapidly to evolving market needs

Without backward integration, semiconductor startups may find themselves dependent on external entities for critical aspects of their business, from design to manufacturing, making it difficult to maintain product quality, control costs, and adapt to market needs promptly. Moreover, they may lack the necessary insight into market dynamics, hindering their ability to make strategic decisions.

Furthermore, being involved in every stage of the process, from design to manufacturing, provides the startup with a holistic understanding of the industry, including key insights into market needs and trends. This understanding could prove invaluable when making strategic decisions and setting the direction for the company.

On the business side, parallel operation in FAE and ESDM can be advantageous in market comprehension and customer relationship management. It enables the startup to understand the market dynamics better, gain insights into customer needs, and build stronger, more informed relationships with its customers. A deep understanding of the market dynamics is vital for semiconductor startups. It informs them about the customer needs, competition, pricing dynamics, technological advancements, and industry trends. This knowledge allows them to make informed strategic decisions, develop products that are in line with market demands, and position themselves effectively in the competitive landscape.

Investor Mindset and Profitability-Sustainability: Investor mindset is evolving, placing a stronger emphasis on sustainability and profitability in the long run. This shift presents an intriguing challenge for semiconductor startups, as the path from inception to tapeout – the final phase of chip design before manufacturing – is often long and fraught with uncertainties

While pursuing a semiconductor project, startups need to navigate a complex landscape filled with technical challenges, substantial R&D costs, and potential failure points. Given the time-consuming nature of these projects and the shift in investor focus, startups are pressed to generate revenue and show profitability even before a successful tapeout is achieved.

This is where Electronics System Design & Manufacturing (ESDM) operations can prove to be vital. By providing ESDM services in parallel with semiconductor development, startups can generate a steady stream of revenue. This can not only keep the business sustainable but also satisfy the growing investor demand for profitability.

Furthermore, profits from ESDM operations can be reinvested in semiconductor development, reducing the financial risk and increasing the likelihood of a successful tapeout. This also demonstrates to investors a practical growth strategy, assuring them of the startup's ability to sustain and grow, even while the primary product is still under development.

Taping Out Their First Chip: After achieving a solid understanding of market dynamics and business operations, as well as establishing operations in electronics design, development, and manufacturing, the startup is ready to tape out its first chip. This stage marks the transition from design and development to manufacturing, representing a significant milestone for the startup.

Becoming Their Own Beta Customers: An interesting strategy for semiconductor startups is be to become their own beta customers. By incorporating their chips into their own products or systems, they can thoroughly test and refine the chips before releasing them to the market. This not only provides valuable feedback for improvement but also demonstrates the functionality and value of the chip to potential customers.