India’s early movers in semiconductor engineering and design are chasing clients abroad as demand from within India remains tepid. At least three companies in the country’s semiconductor industry, including Tata Electronics, have identified global clients as key to generating commercial revenue starting this fiscal year.
On 16 December last year, homegrown electronics manufacturer Kaynes Technology India Limited’s wholly owned chipmaking subsidiary, Kaynes Semicon Private Limited, announced a deal with Japan-based investment firm Mitsui & Co, receiving regulatory clearance on 9 March. The deal, Mitsui said in a press statement then, will “support sales of products manufactured by Kaynes”.
Later, on 17 September, Tata Electronics signed a partnership with Nexperia, a global manufacturer of automotive semiconductors. Nexperia, Tata Electronics said in a press release, will be a key customer for its outsourced semiconductor assembly and test (OSAT) plant in Jagiroad, Assam.
For India’s key semiconductor firms, global clients are among the most immediate sources of commercial demand. CG Semi, a joint-venture subsidiary of CG Power and Industrial Solutions Ltd, announced on 1 July that it had begun commercial chip supplies to Japan’s Renesas Electronics Corp. in June this year. Renesas, to be sure, is also a captive client, as it holds a 6.8% stake in CG Semi.
Industry stakeholders and companies that Mint spoke with said that the rising revenue scope from global chip clients is the natural course of action, as sovereign demand from within India is yet to pick up pace. A senior executive close to developments at Tata Semiconductor Assembly and Test (TSAT) Private Limited, who requested anonymity, said “it will take some time for India to build scale as a semiconductor client base.”
“Most users of chips, such as power, automotive, aviation and other sectors, have set vendors with long-term contracts around the world. These contracts aren’t easy to break just because there’s a new facility somewhere. Sovereign demand from within India, at any rate, was meant to be sourced through government procurement deals—which are either too small and at early pilot stages, or are too few to meaningfully count for now,” the executive said.
This, the executive affirmed, is a key reason why is pursuing global anchor clients to “ensure that the company’s semiconductor production lines run at full capacity.”
A senior executive close to developments at Kaynes Semicon, said global clients are important because revenue does not depend on whether a customer is Indian or foreign.
“There are many global compound semiconductor makers for which we will be offering packaging services. But, the global semiconductor supply chain does not work in silos—they work as a chain. Often, a European fabless chipmaker would be serving Indian industrial clients. It’s a circular economy, and that is why it is important for us to have ample global firms to cater to.”
The Centre, however, has not outlined a specific roadmap for providing anchor-client opportunities to companies incentivized under the India Semiconductor Mission, the incentive scheme of the Ministry of Electronics and Information Technology (MeitY) that supported each of the three companies cited above.
On 23 August, MeitY secretary S. Krishnan told Mint that the ministry would back Indian chip companies in becoming globally successful, rather than limiting their focus to the domestic market.
“We are not a closed economy. We are not going to say you should use only chips made here. Anything that we make should be part of a global value chain—if you’re not able to produce for the export market, then you’re not being fair to your own country. Whatever we support will have to be globally competitive. They may need some support to reach scale before they become globally competitive—that we can support, but in the long term, they should be able to sell in the global market competitively,” Krishnan said.
Since 2021, New Delhi has announced incentives worth ₹2.04 trillion ($21.5 billion) to encourage the establishment of one contractual pure-play chip fabrication plant, two compound semiconductor fabs and nine chip testing and assembly facilities. Of these, CG Semi and Kaynes have begun early-stage commercial production at their respective OSAT facilities in Sanand, Gujarat. TSAT, Mint reported on 5 October, expects its before December.
The course has thus shifted the narrative from sovereign clients in semiconductors, to global ones. To keep pace, even startups believe that global clients will be key. One such is Peak XV-backed Mindgrove Technologies, which expects to generate its first operating revenue this fiscal. , cofounder and chief executive, told Mint last month that it “is not really differentiating between international and Indian clients,” as it seeks to sell Indian chip designs to industrial clients worldwide.
