For decades, the semiconductor conversation in India has been dominated by a single, towering aspiration: the fabrication plant, or “fab.” The vision of silicon wafers rolling off Indian production lines has captured headlines, policy attention, and billions in proposed investment. But for Indian OEMs seeking to build smarter products, capture greater value, and achieve true technological autonomy, there is a more immediate, more accessible, and arguably more strategic path forward.

Welcome to the semiconductor design boom—a revolution that allows Indian companies to own intellectual property (IP) without owning a fab. This is the asset-lite, high-value frontier of the chip industry, and it is reshaping how products are built in India.

The Great Misconception: Why Fabs Aren’t Everything

When we think of semiconductors, we imagine colossal facilities with clean rooms, multimillion-dollar lithography machines, and complex chemical processes. These fabs are indeed marvels of human engineering. But they represent only one slice of the semiconductor value chain—and not necessarily the most profitable one.

Globally, semiconductor companies that own chip designs and associated IP command the highest profits, while manufacturers typically operate on thinner margins. Companies like AMD, NVIDIA, and Qualcomm are fabless—they design chips but outsource manufacturing to specialized foundries like TSMC or Samsung. They capture immense value not from operating fabs, but from owning the blueprints, architectures, and IP that define their chips.

This distinction matters profoundly for India. While the Tata Group builds India’s first 12-inch wafer fab with an investment of ₹91,000 crore, a parallel ecosystem of fabless startups is emerging with far smaller capital requirements but equally ambitious visions.

The Fabless Model: How It Works

The semiconductor industry is broadly divided into three segments: design (creating electronic circuits), fabrication (etching circuits onto silicon wafers), and assembly, testing, marking, and packaging (ATMP). A fabless company focuses on the first and, partially, the last of these—designing chips as products and owning the IP, while outsourcing manufacturing to foundries elsewhere.

This “asset-lite” model offers several advantages for Indian OEMs:

• Lower Capital Barriers: A fab requires billions of dollars and years to construct. A design house can start with a fraction of that capital, focusing investment on talent and IP development.
• Faster Time-to-Market: Design cycles are measured in months, not years, allowing quicker response to market opportunities.
• Greater Flexibility: Fabless companies can switch foundries based on cost, capacity, or geopolitical considerations without stranding fixed assets.
• Higher Margin Potential: IP generates ongoing royalties and licensing revenue across product lifecycles, unlike manufacturing contracts that pay once.

The New Landscape: India’s Fabless Ecosystem Takes Shape

India’s fabless semiconductor ecosystem is no longer a theoretical aspiration—it is a lived reality with tangible momentum.

iVP Semiconductor launched in January 2024 as India’s first fabless chip company, targeting the power sector with chips for solar inverters, smart grids, and two-wheeler batteries. With $5 million in pre-series A funding, iVP aims to achieve $70 million in annual revenue within 3-4 years. Founder P Raja Manickam, a semiconductor veteran who previously built and sold the ₹1,000-crore Tessolve, emphasizes that iVP is “a chip company, not a design company”—it will own products and compete with global players like ST Micro and Infineon.

Larsen & Toubro has committed over $300 million to establish L&T Semiconductor Technologies, a fabless venture targeting 15 different semiconductor products by the end of 2025, with sales commencing in 2027. The company focuses on power chips, radio-frequency semiconductors, and mixed-signal integrated circuits for automotive, industrial, and energy applications—sectors undergoing rapid transformation with electric vehicles and renewable energy adoption.

TCS has launched chiplet-based system engineering services to help semiconductor companies design faster, more powerful next-generation chips. This move democratizes chip design and leverages India’s position as home to 20% of the world’s chip design engineers.

Startups like Mindgrove Technologies and iDO Devices are building on open-source RISC-V architectures, with iDO planning to eventually design its own System-on-Chip (SoCs) as it builds vertical product volumes.

The Market Opportunity: Why Now for Indian OEMs?

India’s semiconductor market is projected to grow from $45-50 billion in 2024-25 to $100-110 billion by 2030. This growth is driven by surging demand across consumer electronics, IoT, electric vehicles, and telecom sectors.

For Indian OEMs, this represents a historic opportunity. Currently, most businesses rely on imported off-the-shelf chips-mass-produced, globally standardized solutions not built with their specific needs in mind. This creates several problems:

• Performance Gaps: Generic chips may not optimize for an OEM’s specific use case, whether that’s battery life in a rural IoT sensor or processing power in an automotive dashboard.
• Supply Chain Vulnerability: Geopolitical shifts, logistics bottlenecks, or export restrictions can disrupt the supply of critical components.
• Cost Inefficiencies: OEMs pay for features they don’t need while lacking capabilities they do.

By engaging with India’s emerging fabless ecosystem, OEMs can shift toward customized solutions—chips designed with their specific requirements in mind. This “co-design” approach, where chip designers collaborate with OEMs on points of customization, enables faster development cycles, reduced costs, and stronger product differentiation.

The IP Imperative: Owning the Blueprint

The real prize in this transition is intellectual property ownership. Today, India employs nearly 20% of the world’s semiconductor design talent, yet most of the IP they create belongs to multinational companies. Engineers at ARM’s new Bengaluru office, designing 2nm chips, or at Renesas validating 3nm automotive platforms, are building value for foreign parent firms.

This is a strategic blind spot. Without homegrown IP, India risks becoming a low-margin manufacturing hub while others capture the value of innovation.

Semiconductor IP matters for three reasons:

• Strategic Autonomy: India cannot depend on foreign firms for critical technology if it wants technological sovereignty.
• Economic Value: Manufacturing contracts pay once; IP generates ongoing royalties across product lifecycles.
• Innovation Leadership: Owning designs gives India influence in global standards and the ability to set directions for future technologies.

Government Support: The Policy Push

The Indian government has recognized this imperative and is responding with targeted interventions. The India Semiconductor Mission (ISM), initially launched with ₹76,000 crore in December 2021, has now evolved into ISM 2.0 with the 2026-27 budget.

Key initiatives include:

• Design Linked Incentive (DLI) Scheme: Providing financial support to companies engaged in semiconductor design and IP development. The scheme has already supported numerous startups, attracting nearly ₹4.3 billion in venture capital funding.
• Chips-to-Startup Programme: Building capacity in IP creation through access to Electronic Design Automation (EDA) tools at subsidized rates for over 270 institutions.
• Target Setting: ISM 2.0 targets support for 30 design companies and development of 10 semiconductor IP cores in 2026-27 alone.
• RISC-V Ecosystem Development: IIT Madras and C-DAC are nurturing startups that build on open-source architectures, providing India with a foothold in next-generation chip design.

The government’s ambition extends to enabling India to design and manufacture chips for nearly 70-75% of domestic applications by 2029, with the aim of being among the world’s top semiconductor producers by 2035.

A Strategic Roadmap for Indian OEMs

For senior executives leading Indian OEMs, the message is clear: the time to engage with India’s fabless ecosystem is now. Here is a practical roadmap:

1. Audit Your Silicon Needs: Understand exactly what your products require from semiconductors—performance thresholds, power constraints, cost targets. Identify where off-the-shelf chips fall short.
2. Engage with Domestic Design Partners: Connect with India’s emerging fabless companies and design houses. Explore co-design opportunities where you shape specifications and share in the resulting IP.
3. Leverage Government Incentives: The DLI scheme and ISM 2.0 offer financial support for design and IP development. Ensure your partnerships qualify and capture available benefits.
4. Think Long-Term About IP: When engaging with design partners, structure agreements that allow you to own or co-own the resulting IP. This transforms procurement relationships into strategic assets.
5. Build Design Capabilities In-House: Consider developing internal chip design expertise. Even modest teams can contribute to specifications and integration, enhancing your ability to partner effectively.

The Cionlabs Advantage

At Cionlabs, we sit at the intersection of this transformation. As an electronics design house serving Indian OEMs, we understand both the product requirements of domestic markets and the capabilities of India’s emerging semiconductor ecosystem.

Our deep partnership with chip manufacturers like Beken gives us visibility into the design process and the ability to influence specifications. We help OEMs navigate the transition from off-the-shelf components to customized solutions, ensuring that the chips powering their products are optimized for Indian conditions, cost structures, and performance requirements.

Whether through co-design engagements, specification development, or integration support, we serve as the bridge between OEM product vision and semiconductor design reality.

Conclusion: The Design-Led Future

India’s semiconductor journey is often framed as a manufacturing story—fabs, ATMP facilities, and production capacity. But the real transformation may well be a design story. By embracing the fabless model, investing in IP creation, and building deep partnerships between OEMs and chip designers, India can capture the high-value end of the semiconductor value chain.

For Indian OEMs, the opportunity is twofold: access to chips designed specifically for their needs, and participation in the IP ownership that generates long-term value. This is not about building fabs. It is about building blueprints.

The semiconductor design boom is here. The question for Indian OEMs is not whether to participate, but how boldly they will seize the opportunity.

Ready to explore how custom silicon and IP ownership can transform your product roadmap? Let’s design the future together.

Cionlabs. Bridging OEM Vision and Semiconductor Innovation for India.