India Cellular and Electronics Association (ICEA) on Thursday said there is a need for improvement in the semiconductor design-linked incentive (DLI) scheme, so that the country’s own intellectual properties (IPs) can be created.
Since very high costs are involved in semiconductor design and creation of IP, ICEA has recommended inclusion of mask sets in the DLI scheme and subsidising its cost by up to 80% for the design companies.
Mask set is a collection of photomasks that are critical for designing an integrated circuit. It is basically a template of what will be printed on a raw wafer using which chips are made.
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The cost of creating mask sets is usually high, ranging from $1–20 million, depending on the complexity of the design and the specific manufacturing technology used. In the absence of any domestic facility of mask creation, the same is currently being imported from countries like Taiwan. This cost presents a significant entry barrier for small companies or those attempting to create a new chip design, ICEA said in its report on India’s semiconductor sector.
Among other things, the industry has recommended encouraging larger companies to participate in the semiconductor design ecosystems, and focus on creation of own IPs.
“As we navigate through a transformative era in electronics manufacturing and hi-tech technology, India stands at a pivotal juncture to redefine its role in the semiconductor value chain,” said Pankaj Mohindroo, chairman of ICEA.
According to Mohindroo, the larger companies should be encouraged to come in the design ecosystem as they can lift good quality startups in the sector.
AM Devendranath, CEO of research firm Feedback Advisory said, “we need to build more than 200 product design companies over the next five years and create our own ideas across different categories for making a space in the semiconductor design ecosystem.”
“We need to support the domestic design companies with appropriate financial support and then allow them to grow in their own market,” Devendranath added.
The semiconductor DLI scheme is part of the government’s `76,000 crore semiconductor incentive scheme. The government kept aside `1,000 crore for the DLI scheme. Under the design scheme, the government has currently approved nine applications.
The emphasis on improving the DLI scheme, especially for mask sets, is also because currently Taiwan Semiconductor Manufacturing Company (TSMC) has spare capacity of 7 nm because many majors like Qualcomm have moved to 5nm, 3nm and 2nm technology. Indian startups can design chips in that node and fulfill the demand.
ICEA said, the inclusion of masks sets in DLI India will also encourage setting up of a globally competitive design ecosystem.
Today, nearly 20% of the world’s semiconductor design engineers are based in India, who are designing almost 3,000 chips every year. However, most of the engineers work for big companies, and that is resulting in limited domestic IP creation, Devendranath explained.
Among other key recommendations, ICEA wants the government to invest in refurbished fabs and urged it to focus on creation of a skilled semiconductor workforce for a self-reliant semiconductor ecosystem.
