Some semiconductor subsidy proposals worse than early-stage startup pitches: Neelkanth Mishra

Mishra, who recently joined as the chief economist of Axis Bank, also remarked that the balance sheet of the backers applying for the chip subsidy needs to be strong as the semiconductors industry is "viciously cyclical."

Jul 28, 2023 - 21:56
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Some semiconductor subsidy proposals worse than early-stage startup pitches: Neelkanth Mishra
Some semiconductor subsidy proposals worse than early-stage startup pitches: Neelkanth Mishra

Mishra, who recently joined as the chief economist of Axis Bank, also remarked that the balance sheet of the backers applying for the chip subsidy needs to be strong as the semiconductors industry is "viciously cyclical."

Some of the proposals submitted by companies to avail of the $10-billion chip subsidy scheme of the Union government were worse in details compared to early stage funding pitches made to venture capital firms by startups, economist Neelkanth Mishra said on July 28.

Mishra is a part of the panel that is evaluating the proposals on behalf of the India Semiconductor Mission and was speaking at the Semicon India 2023 conference organised by the government at Gandhinagar.

"I see these proposals as seed stage investing in VC. Some of the proposals came with absolutely no clarity on who is going to run the show. When you are backing a plan in early stage, you need to have some granularity in who is running it," he said.

"If it is a new company with no previous experience in semiconductor manufacturing, you also need clarity on business plan and revenue plan," he added.

Mishra, who is a part of the PM's economic advisory council and recently joined as the chief economist of Axis Bank, also remarked that the balance sheet of the backers applying for the chip subsidy needs to be strong as the semiconductors industry is "viciously cyclical."

The Semicon India roadshow comes at a time when India is trying to attract major semiconductor players to set up chip fabrication and assembling plants in the country with a $10-billion subsidy programme.

During Modi's visit to the US, semiconductor major Micron committed to set up a $2.7 billion assembling plant in the country. According to estimates, the Centre and state government of Gujarat will cumulatively bear 70 percent of the cost of the project in the form of subsidies.

Meanwhile, semiconductor equipment maker Applied Materials has said it would invest $400 million to design chipmaking machinery in the country.
However, the government has yet been unable to attract any major foreign foundry to the country at a time when advanced economies like the US, Germany, the European Union and Japan have announced large subsidy programmes in a global race to corner the semiconductor pie.

Some of the players who were being seen as frontrunners to secure a chunk of the government’s chip subsidy, but haven't yet received the greenlight include mining conglomerate Vedanta and an Orbit Ventures, Tower Semiconductor-backed consortium called ISMC.

Meanwhile, at the event on July 28, Vedanta Chairman Anil Agarwal said that the first made-in-India chips from the company's planned fab will roll out in the next 2.5 years, while reaffirming that the process to set up a chip manufacturing unit is on the track as the company has found a technology partner.

"Vedanta is fully committed to a fab and a display unit in India. David Reed (CEO of semiconductor fab unit) has created a fabulous plan to execute the fab venture and similarly YJ Chen for display glass manufacturing," he said.
"We have identified a tech partner for fab and are in the process of tying up with them," he added.

Vedanta's fab ambitions have been hitting a few hiccups, first after the government returned an earlier proposal on grounds of a missing technology partner. While the company has been reportedly inking memoranda of understanding with some international companies like STMicroelectronics, the government wants applicants to have veteran chip technology players to invest as a joint venture partner.

The mines and mineral company hit yet another roadblock recently when its JV partner Foxconn, which is one of the biggest Apple suppliers, checked out of the partnership and instead decided to venture on its own.

Now and then, industry experts have also pointed out that Vedanta may not have the massive financial arsenal required to set up a fab and keep it running.