India's chip making ecosystem will build up in a couple of years, says VP of NXP Semiconductors

The Indian semiconductor industry is projected to reach a market valuation of $55 billion by 2026, driven by growing internal demand which stood at $24 billion in 2023, met entirely through imports.

A global pivot from China is also making the country a promising alternative for companies like Micron, while the first electronic chip production facility is projected to be up and running this year.

While some challenges remain, the domestic ecosystem is developing rapidly through startups, says Hitesh Garg, Vice President and India Managing Director of Dutch chip design and manufacturing company NXP Semiconductors.

Talking to DH’s Anjali Jain, he further expanded on the potential for growth in the country and NXP’s plans to grow and collaborate with startups.

Early last year, NXP’s global chief executive had expressed an interest in opening a fab unit in India if the conditions are right. How is it going on that front?

We are more of a product innovation company, our focus is not on process innovation. We already have our manufacturing partners in place and at this moment, we are not planning to expand our manufacturing footprint to India, but we will be looking at partnerships, once the manufacturing ecosystem is set up for them.

The government has provided huge incentives for people to come and set up fabs. Around 4-5 companies have expressed strong interest to put up fabs in India. Of course, there are challenges, because these are huge investments. So, they need to have the right technology partners. I think that work is in progress, but in 1-2 years, we would see the manufacturing ecosystem building up in India.

NXP recently partnered with Mahindra & Mahindra for their electric vehicles. Are there more such partnerships in the offing?

India is a great market where the electronic ecosystem is evolving very well. It’s all driven by the local demand that we have here. The GDP is growing, and with that demand for electronics and cars.

In automotive, we see huge demand coming up, but we are looking at the whole ecosystem, especially automotive, industrial, connectivity, telecom and IoT. Wherever we see right partnerships, we will come forward. Apart from this, home automation and security are also interesting.

How do you think India can shift from being service-led to creating indigenous chip design and IP?

There are various incentives available which are not only product linked, but also design linked, which is helping the startups to build new IPs and products to serve the Indian market. That process has started along with supporting and mentoring those startups and making sure that they are globally connected. It takes some time to evolve that ecosystem, but it is growing. So while big design companies are looking at India, at the same time, these startups are also making their own IP and product design, which are supported by the government.

What are the challenges startups are facing to move ahead with this?

The biggest challenge is definitely market access. If you have a design, you need to manufacture it, you have to have a fabrication and a company will buy it only after looking at proof points (evidence pointing to quality and uniqueness). There are huge costs in getting the fabrication done. It is taking some time to get to that stage where they create stronger proof points and establish themselves as a player providing IPs for semiconductors. It’s a regular growth process. But since it requires large investment, we need to see how we create solutions.

How is semiconductor demand and supply shaping up globally?

In 2020, we had seen this chip shortage issue, and it was not uniform in every technology. The gap started bridging later and by now at least we don’t see a huge chip shortage issue. It took some more time to get to that supply situation, but now it looks quite okay.

Every geography has understood the need for future demand. The US is giving incentives to build more fabs there. Similarly in Europe, there are programs like the European Processor Initiative which will lead to a growth of fabs in Europe as well as other geographies.