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Why Semiconductor startups are sure to shape our digital future

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– By Shashwath T R. Co-founder and CEO, Mindgrove Technologies

Before we look into the future, we need to peek into the past. Over the last 50 years, semiconductor startups have created the world we live in today.

Semiconductor history and startups

Intel Corporation was founded in 1968 in a small office in Mountain View, California, by Gordon Moore and Robert Noyce. In 1971, Intel released their first microprocessor – the Intel 4004, followed by the 8008 in 1972 and 8080 in 1974. The first personal computers and video game consoles used the Intel 8080. In 1978, just ten years after it was founded, Intel released the Intel 8086 – the processor at the heart of the IBM PC – the first mass commercial computer. The world never looked the same once the PC entered our offices and, eventually, our homes.

ARM Holdings originated from a small computer laboratory in Cambridge, England. Incorporated in 1990 as a joint venture between Acorn Computers, Apple Inc. and VLSI Technologies, ARM was building processors for Acorn’s PCs. Their little chip was energy efficient – making it extremely useful for mobile devices. In 1998, Nokia released the ARM-equipped GSM phone “Nokia 6110”. Not only did the phone popularise the use of mobile phones itself, but it also popularised mobile games – it was the first phone to have ‘Snake’ in it. ARM chips power 99% of the world’s smartphones today.

NVIDIA’s story is similar – it was birthed in 1993 as a small semiconductor startup. The founders, Jensen Huang, Chris Malachowsky, and Curtis Priem, wanted to make chips that would enable realistic graphics on computers. After years of research, they released the GPU (Graphics Processing Unit) in 1999. The GPU not only changed gaming forever, but it also enabled complex simulations and machine learning. In the last decade, the advancement of AI is partly credited to the incredible chips NVIDIA has brought to the market.

Intel, ARM and NVIDIA enabled the PC, mobile and AI revolutions, respectively. What’s common to these epoch-making semiconductor companies? Each was once a small startup with big ambitions.

Enabling ecosystem

Building a new startup in the semiconductor industry is extremely expensive – salaries, specialised software, and prototyping/ manufacturing costs are very high. Then, there is the issue of access to high-quality (trained) talent. Lastly, products in this industry are profitable only at scale – tens of millions of units; so there is a significant risk.

These kinds of hurdles can be overcome only if the ecosystem is supportive. Fortunately, the Government of India is batting for the semiconductor industry by providing PLI, DLI schemes, and other support. Innovation hubs and incubators have been set up close to academic institutions to encourage researchers to start their own companies. For example, the IITM Pravartak Technology Innovation Hub at the IIT Madras Research Park has incubated multiple semiconductor startups.

Investors are also aligned with the opportunities available in the space, bringing the capital required to develop and market products. Further, a robust talent ecosystem has developed alongside computer science divisions of major academic institutions like IISc, IIT Madras and IIT Delhi.

Emerging Trends in Semiconductors

Indian semiconductor startups are uniquely positioned to shape our digital future, but what opportunities are available for them to solve? We look in three broad directions.

The last decade has seen an explosion in connected devices. Some of these devices are ubiquitous – fingerprint scanners, CCTV cameras, smartwatches, sound boxes and more. Other devices – like connected appliances, smart-lights, smart-meters – are catching up. All these devices require different kinds of chips. The ideal smart-fan chips differ from the optimal chips for a GPS pet tracker. And as consumers accept more devices into their lives, more requirements pop up for semiconductor companies.

A priority from the government side is to make India less reliant on semiconductor imports. According to data presented in the Rajya Sabha by the Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar, total semiconductor chip imports stood at Rs 129,703 crore in 2022-23, rising from Rs 67,497 crore in 2020-21. The semiconductor industry has always been globalised, with talent, IP and products moving freely across boundaries. Making them less reliant on the global supply chain is a new challenge.

Lastly, recent advances in AI technology have meant that the world needs faster and higher-performance chips. At the same time, the speed at which we were able to add more and more transistors to silicon has slowed down to a grinding halt. Semiconductor companies must now think of newer ways to make better chips. This is true at all levels – from chips that power cloud AI servers to IoT chips. For example, a newer set of chips would be required to enable 4 CCTV cameras mounted on a traffic light to locally (without connecting to the cloud) recognise if cars passing by are stolen (or not).

Summary

Semiconductor startups have played a massive role in shaping our world. As we move towards our IoT-enabled, AI-powered future, new chip-design requirements are being uncovered. Semiconductor startups are responding to these opportunities – they are in “build mode,” even though the odds for success are stacked against them. Fortunately, the government is playing a supporting role, and the ecosystem has been enabling.

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