Abstract:
In the past decade, India’s start up ecosystem has flourished, giving rise to more than 100 unicorns, or start-up companies valued at more than $1billion USD. None of those were in the semiconductor space. That absence presents an immense opportunity.
The stakes in the semiconductor industry are extraordinarily high. These tiny chips are the foundation for critical technologies like artificial intelligence (AI), quantum computing, and renewable energy. Yet, building a thriving semiconductor ecosystem is no easy task. Startups in this space need long gestation periods and capital requirements that dwarf those of other sectors. For context, advanced semiconductor fabrication plants (fabs) demand investments exceeding $10 billion. In a country like India, where such infrastructure is still in its infancy, this represents a daunting challenge.
However, India is not starting from scratch. An estimated 20% of the global semiconductor engineering workforce is of Indian origin, an impressive intellectual asset. Despite this, India’s semiconductor startup sector has struggled to generate significant financial returns. By May 2024, India's semiconductor-related exits amounted to a modest half a billion dollars. Israel, with a smaller talent pool, boasts over $50 billion in exits. The difference lies not just in technical expertise but in the ecosystem that nurtures these startups. In the semiconductor sector, innovators claim most profits, while manufacturers get slimmer margins1.
What does Israel do differently? It has fostered an environment where technical talent, market awareness, and active corporate ventures come together. Israeli startups aim for global leadership, leveraging their agility and innovation in competitive markets. The Indian semiconductor sector, however, has traditionally focused on servicing multinational corporations rather than creating indigenous intellectual property. This service-driven model has limited our ability to carve out a space in the competitive global market.