MeitY officials attributed the poor strike rate to many startups being basically into designing and the fact that their designs have not been approved by companies which are making products.
Again, of these 14, only 5-6 startups including Mindgrove Technologies and Aheesa Digital, have been able to secure fabrication orders for their design prototype. (Pixabay)
The majority of startups have failed to light up the chip design space. Of the roughly 60 proposals submitted to the ministry of electronics and IT (MeitY) by these companies to get the benefit of subsidies under the design-linked incentive (DLI) scheme, only 14 have been able to make the cut. The ministry has set itself a target of funding 100 startups.
Again, of these 14, only 5-6 startups including Mindgrove Technologies and Aheesa Digital, have been able to secure fabrication orders for their design prototype.
MeitY officials attributed the poor strike rate to many startups being basically into designing and the fact that their designs have not been approved by companies which are making products. Further, it seems that most of them lack a fixed client base. They have also probably been unable to get external funding support from venture capitalists (VCs) and other investors.
“It is an irony that India has 20% of the world’s chip design engineers, but it hardly has any intellectual property (IP) of its own, which is key for the country to become a product nation and reach the target of $500 billion in electronics manufacturing,” an official said.
In the next leg, the government is expected to extend the DLI scheme to larger companies so that more IPs can be generated. Firms such as L&T Semiconductor Technologies and NXP, among others, have expressed interest in the scheme. There is also a plan to increase the outlay of the scheme.
Of the outlay of Rs 76,000-crore semiconductor incentive scheme, Rs 1,000 crore has been reserved for DLI, for which only startups can apply. Startups which qualify are entitled to a subsidy of Rs 15 crore, implying that of the Rs 1,000 crore so far only Rs 200 crore has been allocated.
Apart from the Rs 15 crore as subsidy, the government also provides deployment-linked incentives at 4-6% of net sales over a five year period subject to a ceiling of Rs 30 crore per application. This is yet to be claimed by any of the firms as none of their designs has reached the deployment stage yet.
The deployment-linked incentive is provided to firms whose semiconductor designs for integrated circuits (ICs), chipsets, system on chips (SoCs), and systems & IP cores are deployed in electronic products.
Chip design is the first step in the semiconductor fabrication chain. Without it the right product and the subsequent steps such as semiconductor manufacturing, assembly, packaging, etc, are not possible.
V Veerappan, chairman of India Electronics and Semiconductor Association (IESA), said, “Besides good quality proposals, we see a gap in awareness about the scheme among startups.” He added that as an industry association, it is working with MeitY to organise workshops for startups in major cities. According to Veerappan, designing and prototyping the chips require a fair amount of capital. As such, the government should look at increasing the outlay under the scheme.
Content retrieved from: https://www.financialexpress.com/business/sme-startups-fail-to-light-up-chip-design-space-3650591/.
