India's Chip Design Startups Pay Fabs 50% More, Nikkei Finds

India's chip-design startups are paying their foundries roughly 50% more than larger customers for the same wafers.

Rakesh Malik, who founded Vervesemi Microelectronics, told Nikkei the fabs "charge us 50% more than what they give to other companies." Packaging houses inside India, he said, quote prices "two to three times what factories abroad charge."

The problem is scale. Indian design startups typically order around 100 wafers at a time; the major chipmakers order tens of thousands per month, and foundries price accordingly.

Government money is in the room. Phase one of the India Semiconductor Mission has funded 24 chip-design projects, covering half of their design costs up to Rs 15 crore per project and offering up to 6% of turnover as a sales incentive. A second phase launched this year adds a 9% reimbursement on net chip sales. The firms are now reaching the commercial production step, which is where the fab-cost gap bites.

The two visible wins so far: Bengaluru-based Fermionic Design, which under a June 11 commercial agreement became "the first Indian company" to have RF chips manufactured by GlobalFoundries and is now shipping in "medium" volumes; and Vervesemi, which raised $10 million from investors this year.

Not everyone thinks the funded cohort is big enough. "24 is too small a number," Mukul Sarkar, who founded Orvis Semi, told the paper, estimating that only two or three of the startups are likely to survive the next decade.