‘We’re Creating Chip Factories for Foreign Customers, What’s the Point?’

India has been actively advancing its semiconductor mission through aggressive investments and the development of its own fabrication plant, alongside multiple existing OSAT facilities. While this push has brought the industry to the forefront in India and globally, it cannot rely solely on building fabs and packaging plants. 

This shift must also come into play while building Indian product companies that actually use these facilities, says Raja Manickam, founder of iVP Semi and former head of Tata Electronics’ OSAT operations. In an exclusive interview with AIM, Manickam says he believes that India will miss its moment if the country continues to rely on foreign chip suppliers for core components used in power, mobility, and consumer systems.

The end goal should be complete independence and not just manufacturing for its sake, he adds. “We have 100% dependency today. Not even one chip is made in India.” For him, the question driving India’s semiconductor story is as simple as who controls the basic chips that power everyday systems?

iVP Semi is his attempt to answer that question by building foundational power chips in India, starting with MOSFETs and other basic devices. These chips are not cutting-edge, but they sit at the heart of everyday products like EVs, renewable energy systems, consumer appliances, and industrial equipment. They also dominate India’s electronics bill of materials.

Acquisitions are Very Important

India has seen public funding for fabs and OSATs, but Manickam warns that these facilities may ultimately rely on foreign customers. He argues that this defeats the purpose.

Meanwhile, the CEO of Tessolve, Srini Chinamilli, told AIM that the customer’s nationality should not be the metric of success. “If it’s made in India and sold to the rest of the world, that is something you can be proud of,” he said, adding that global demand is essential for competitiveness. 

He pointed out that India already has significant domestic demand, not just from Indian firms but also from multinational companies manufacturing for the Indian market, and that the first fab will still meet many local needs. 

According to him, the upcoming facility can meaningfully serve segments such as power management, analogue components and low-end microcontrollers, even if it cannot provide the advanced nodes needed for data centres.

On the contrary, Manickam pointed to the example of CG Power’s OSAT, which will initially run on business from Renesas, a Tokyo-based company. He sees no issue with foreign customers, but questions the larger vision. “The government has put probably 70% into this capex, who’s the beneficiary of that?” His concern is that India may build capacity, but fail to link it to Indian product companies.

He also believes that India will need strong incentives for domestic use. “Can I get 20% favourable pricing?” he questioned, as an Indian semiconductor company. His argument is that if public money bridges early losses and learning cycles, then Indian companies could gain an advantage that allows them to scale.

Manickam is also sceptical that small fabless start-ups will drive meaningful growth. He added that the combined chip sales of Indian semiconductor startups are “under $10 million.” For context, the global market exceeds $500 billion.

Instead, he advocates a coordinated plan where the government funds not just facilities, but also integrated Indian companies or strategic acquisitions. “There has to be an element of acquisitions,” he suggests, citing the example of Nexperia, the Dutch company bought by Chinese investors for $200 million that has grown to more than $2 billion in sales.

His broader view is that India has everything needed for a semiconductor industry, except the ecosystem to retain and deploy its own talent. “We are training for the world, when will we help ourselves?”

A Domestic Market India Can Win

Manickam believes that iVP Semi can claim as much as a quarter of India’s power device market in the next decade. He said that the domestic market is large enough for Indian companies to scale. “If I cannot win the Indian market, forget about going global.”

He also believes that Indian businesses will buy local chips if they are competitive. “Japanese will buy from Japanese, Chinese will buy from Chinese, Germans will buy from Germans.” 

“I just hope that Indians will buy from Indians.”

iVP Semi is also collaborating with institutions such as IIT Bhubaneswar and other state and private colleges to enhance design capacity. He says the collaboration is a “win-win” because academic teams get to see their designs enter commercial production rather than stay within research labs.

The company is preparing to launch new power modules and traction products, which will sit above individual chips. “Instead of selling one chip, we’re selling a subsystem,” he updated. These products are undergoing testing and will be announced in the coming months.

As India advances with its semiconductor efforts, Manickam remains focused on his concern. “The overall picture will be independence,” he said. For him, this means designing, manufacturing and consuming Indian chips, not only building factories or signing large partnerships.

It is “simple” he said: “If India cannot do semiconductors, I don’t think any other country can.”

Start With Power Blocks India Uses Every Day

Manickam sees the power and electrification segment as the most practical entry point for India’s chip ambitions. His view is that India should first target segments where chips are technologically achievable and in high domestic demand.

He also believes that India’s semiconductor industry must accept that it cannot jump straight to advanced processors or AI chips. “Do what you can do,” he said. “Once you build the foundation, then slowly other things will build on top of it.” His approach begins with “very simple building block chips” that universities and small teams can design and implement.

This aligns with iVP Semi’s product roadmap. The company currently buys wafers from Taiwan and Japan and will begin shifting to Indian OSATs once commercial packaging capacity becomes available. Testing will remain in-house. “I want my quality, reliability of the product that I ship guaranteed,” he said.

“Hopefully, when the Tata fab comes, we will move what we are buying from the wafer fabs outside,” he confirmed.

The post ‘We’re Creating Chip Factories for Foreign Customers, What’s the Point?’ appeared first on Analytics India Magazine.