PLI scheme is a good first step for semiconductor manufacturers.

I think we have gone from being heretics to thought leaders. We have been saying it’s a strategic sector for 12 years now.

It took a whole set of small shifts to led to this — chip shortage, supply chain issues and anti-China sentiments, all added up to this. In some sectors, there isn’t a proper inventory planned. They order when they need, just in time. Automotive is one such sector and hence, they are in trouble. Phone companies, in comparison, are more prepared which puts them in a better position.

If we are doing fab in India now, it will take another five years to start producing in capacity. By that time, there will be a glut in the market which will eventually cause a fall in prices. These are cyclic things. Irrespective of these cycles and reactions to certain geopolitical events, we should look at a 10-year plan on how India can play a prominent role in the global supply chain. As long as we participate and play a significant role, that should be a good enough target.

The scheme has just been announced. Fortunately, the semiconductor PLI scheme includes another element called DLI or Design Linked Incentives. One part of it (scheme) is for setting up fabs and a small part of it is for companies like ours. I think 50 per cent of our expenditure capped at ₹15 crore is what companies like ours can get, along with an additional 4-6 per cent of sales. This is what I get from the current note, though I am yet to see the detailed report.

Typically, a fabless company would need more than ₹200 crore to really take off; ₹15 crore in that sense could be less. If provided annually, it will be good quantum of money.

Overall, though it’s a little late for the fabless ecosystem, it’s still a good start.

Yes, we will. The DLI scheme is for companies like ours. This is more of a reimbursement plan for us. Irrespective of government schemes, we have to continue making investments. This year, we will easily make around ₹70-80 crore investment in R&D — we do substantial investments in R&D, probably the highest among private companies. We expect to get some reimbursements on those investments. But we are not doing anything specifically because the government has come up with a scheme.

It depends on what node the company intends to manufacture. If you are looking at the latest nodes such a 7 nm, 14 nm, 5 nm or 2 nm, then $10 billion is junk change. It is peanuts.

But if a bulk of these (companies) are into the older nodes like 28 nm or below, or if they are looking at display fabs, then $10 billion is good enough to be distributed across a few companies. Though it’s not enough, I would say the scheme is a good first step for semiconductor manufacturers.

Depending on what companies want to do, it’s either enough or too little. But if these companies are looking to do galvanised fabs or older fabs like power electronic transistors or probably smaller rf unlock fabs — the amount is good enough for them.

We are now looking at 14 nm and 16 nm. Our last chip was at 28 nm with Samsung. As far as I know, everybody is looking at setting up 12 nm fab in India. There might be talks going on with Taiwan.

The local investors don’t understand this ecosystem, they are duds. Somebody who invests in semiconductor companies knows that the gestation period is long. Gestation period is at least 5-7 years before we turnaround and start making money. That’s why we have always raised money from strategic investors. Intel Capital, General Motors and Sinclair Broadcast Group are some of our investors. We have been profitable for the last few years except last year due to Covid. Raising funds in India is extremely difficult for us. All our strategic investors are foreign investors, it’s easier to raise funds from the US. 

We are constantly looking at raising funds. If things go well over the next 2-3 years, we might do an IPO as well.