iVP Semiconductor Pvt Ltd is likely to go down in history as India’s first fabless chip company—a company that designs semiconductor chips as products and owns the intellectual property, though the manufacture, assembly, testing, and packaging of the chips will be outsourced.
The company was set up by P Raja Manickam, a semiconductor veteran, who worked for the US giant Texas Instruments earlier and then set up and ran the ₹1,000-crore Tessolve Ltd before selling it to the Hero group.
Funding and growth plans
“iVP Semiconductors will be an Indian chip company, competing with foreign companies,” Manickam told a press conference here today. The aim is to achieve annual revenues of at least $70m in 3-4 years. The company has secured $5m in pre-series A funding.
“We are a chip company, not a design company,” he said, stressing that the company will own products.
The start-up is targeting the “tremendous opportunities” in the power sector. It will make semiconductor chips for electronics in solar inverters, smart grids, and 2-wheeler batteries. In this, it competes with companies like ST Micro and Infineon.
Asked why a customer would buy from iVP Semi rather than from these large companies, Manickam said that the large MNCs do not have chips designed exclusively for India, but iVP Semi would do. “Our mission is to “achieve greater technological autonomy,” says a press release issued by iVP Semi.
Semiconductor segmentation
The semiconductor industry is broadly divided into three parts—design (creating electronic circuits), manufacture (fabrication in a foundry, where the circuits are etched on a silicon wafer) and ‘assembly, testing, marking and packaging’ (ATMP). While being recognized for its design capabilities, India has no fab—the Tata group has just begun building one, with an investment of Rs 91,000 crore. In ATMP, companies like Micron and CG Semi have come up to build facilities.
Manickam stressed that iVP Semi, following an “asset-lite” model, would only have the design and testing part of ATMP—all other elements of the value chain would be outsourced. Even for testing, the company is talking to the Tamil Nadu government to set up ‘common test facilities’ that many companies could use.
As the demand for electronics goes up, so does the demand for semiconductors, which are at the heart of electronic components. Semiconductor industry expert G S Madhusudan, who was part of the team that developed the Shakti processor at IIT Madras and is now the CEO of Incore, a company that manufactures processors, told businessline that there were at least five emerging areas driving the demand for chips – energy meters, smart cards, BLDC motors, controllers and battery management systems in electric vehicles and point-of-sales devices.
He noted that if India develops its own chip products, it can capture 15-20 per cent of the huge market for chips priced under $5.