Lip-Bu Tan to be advisor for Yali Capital; India’s first deep-tech venture fund

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Lip-Bu Tan to be advisor for Yali Capital; India’s first deep-tech venture fund

Lip-Bu Tan to be advisor for Yali Capital; India’s first deep-tech venture fund

Industry News
Jul 16,24

The next step for India should be to design and build its own products and create its own homegrown semiconductor brand.

Lip-Bu Tan to be advisor for Yali Capital; India’s first deep-tech venture fund

India has the potential to rise and emerge as a major player in the next big semiconductor wave, leveraging its strong human capital, which is already driving technology giants like Intel, Qualcomm, and Nvidia. Lip-Bu Tan, CEO, Cadence Design System, a leading global voice in the multi-billion dollar chip industry, emphasised that India should focus on value additions such as chip design rather than fabrication, which is capital-intensive, power-consuming, and risky without committed long-term customers.

"Many Indian entrepreneurs are comfortable outsourcing IT designs. India is seen as an outsourcing nation, not a product nation. Therefore, I always encourage companies to focus on purpose-built silicon," Tan told the source.

During his visit to India for Anant Ambani’s wedding, Tan also met with Indian business leaders and will attend the launch of Yali Capital, India’s first homegrown deep-tech venture fund with a strong emphasis on chip design. He will be the fund’s anchor investor and advisor. In an interview, he discussed a wide range of topics, including the geopolitical tensions over chips and the future of frontier technologies and materials like carbon nitride, silicon carbide glass, and artificial diamonds, which will power next-generation EV batteries and data centres.

"The next step for India should be to design and build its own products and create its own homegrown semiconductor brand," said Tan, adding that he is glad the Indian government recognises the importance of semiconductors as the foundation of any computing device.

Tan’s comments are significant in a post-COVID world driven by artificial intelligence, where semiconductor chips are essential for everything from cell phones and internet networks to cars and advanced medical procedures. The geopolitical tech race between the US and China has divided the world into two cohorts, impacting the semiconductor industry's global supply chains.

India is home to a significant portion of the world’s semiconductor R&D talent. For companies like Apple looking to reduce dependence on China, India could emerge as the third most crucial semiconductor hub. Apple already manufactures iPhones in India through contract manufacturers, including Tata Electronics.

India has seen landmark business ventures in the semiconductor sector following the launch of the India Semiconductor Mission. Companies like the Tatas, Murugappa Group, and America’s Micron have committed nearly $18 billion to build chip design, fabrication, assembly, testing, and packaging units. Global giants such as Tower Semiconductors, Foxconn, Simmtech, AMD, Kaynes Technology, and homegrown IT services firms like HCL and L&T are also investing in domestic semiconductor design and fabrication.

Tan cautioned that while India has the IT services backbone to support semiconductor foundries, building fabs requires significant infrastructure improvements, including consistent power and water supply. He suggested starting with mixed-signal (analog and digital processors), power management, and image sensors, which have higher volumes and do not need leading-edge processors.

"Leading-edge node processing foundries that manufacture the latest sub-5-nanometre chips are very expensive, requiring $20-25 billion investments. Without committed customers, it's very risky. You need at least one to start safely and over time you can diversify," Tan explained.

The challenge for India will be to become the lowest-cost producer while maintaining advanced technology to deliver consistent quality and attract top customers. "Apple’s commitment to diversify out of China is a big win for India," Tan emphasised.

Tan, a nuclear engineer from MIT turned venture capitalist, has a storied career, including turning around Cadence Design from near bankruptcy into a $52 billion company in 13 years. As founder chairman of San Francisco VC fund Walden International, Tan backed Asian challengers in the mid-90s, with many of his investments being acquired by top global corporations.

Looking ahead, Tan sees significant growth drivers for deep tech, including 5G and 6G mobility, hyperscale computing, cloud, automotive, edge AI, and Industrial IoT, predicting the semiconductor industry will reach $1 trillion even before 2030.

However, Tan is concerned about the impact on climate change, noting that 20% of global electricity could be consumed by data centres alone. "Processors are extremely power-hungry. Power management, cloud infrastructure, memory innovation, and cooling technologies are critical areas to focus on to prevent shortages," he warned.

(Source: ET & MSN)