Startups under India's Design Linked Incentive (DLI) scheme have raised over $100 million and reached a milestone of 35 chip design tape-outs. This progress shows India's growing ability to move from prototype design to functional silicon, though companies still face significant hurdles in commercial manufacturing and market access.
The Indian semiconductor design sector is hitting a crucial turning point as startups supported by the government’s Design Linked Incentive (DLI) scheme have now collectively raised over $100 million in venture capital. These companies have also successfully completed 35 chip-design tape-outs, a vital stage where the final design is submitted for fabrication to check if the chip works as intended.
Aheesa Digital Innovations Milestone
Among the companies leading this shift is Chennai-based Aheesa Digital Innovations. The fabless startup recently achieved first-pass silicon success for its 'VIHAAN' networking System-on-Chip, a product designed for fiber broadband applications. This test success, confirmed on Independence Day, marks a critical step before moving toward mass production. Beyond its design success, Aheesa is strengthening its infrastructure, having recently signed an agreement with the state government for a ₹250 crore semiconductor design and R&D centre in Chennai. The company previously raised approximately ₹40 crore from investors, including the Tamil Nadu Emerging Sector Seed Fund, to support its growth.
Scaling Design Capabilities
Other DLI-supported companies are also marking progress in specific technology areas. Vervesemi Microelectronics has tested a motor-controller chip, while Netrasemi has validated a 12nm Vision SoC aimed at video analytics. Additionally, OptoML has received a 12nm compute-in-memory SoC designed for AI processing, and IndieSemiC has secured global certification for its Bluetooth module. These developments are supported by broader government initiatives under the Semicon 2.0 program, which has an outlay of ₹1.27 lakh crore to build a comprehensive ecosystem ranging from chip design to fabrication and research.
Challenges Ahead
While achieving a tape-out is a significant technical milestone, investors should note that design is only the initial phase of the semiconductor value chain. The path to commercial success remains complex. Startups in this space face substantial risks, including the difficulty of gaining market access and securing customer validation. Because these firms are generally fabless—meaning they design chips but do not own manufacturing plants—they are heavily reliant on external foundries. This dependence can pose supply chain risks if manufacturing capacity is tight or costs fluctuate. Additionally, the semiconductor industry is highly competitive, and these firms must prove that their designs can compete on both performance and price against established global players to achieve sustainable, high-volume sales.
Investors may monitor whether these startups can convert their successful designs into high-volume manufacturing contracts. The ability of these firms to secure consistent customer orders and navigate the long and capital-intensive product development cycle will be the key indicator of their long-term financial viability.