In a recent conversation with India Tech Report, GS Madhusudan, co-founder and CEO of Incore Semiconductors, outlined some of the practical realities facing India’s semiconductor industry as it transitions from pure technical capability to commercial success.
He spoke about specific product strategies, such as the company’s SoC Generator tool, as well as broader industry challenges like the gap between India’s established design talent and the business expertise required to compete globally.
Here are 5 takeaways that capture his assessment of where Indian semiconductor companies can realistically compete and what obstacles they must overcome to achieve meaningful scale.
1. Target specific chip segments opportunistically to gain market share
Madhusudan argues that Indian semiconductor companies could focus on chips priced below $10, for instance, where Western competitors often struggle with margin pressures. He uses IP camera chips as an example, noting they sell for $2.50 to $3 for four-megapixel versions. While these markets offer lower margins, Indian companies can operate profitably at these levels due to lower operational costs. Western companies typically prefer higher-margin products and may exit these segments or resort to white-labelling arrangements. This creates opportunities for Indian ventures to fill market gaps.
The strategy requires understanding volume economics. A $10 chip selling 10 million units annually generates $100 million in revenue from a single product. Ten such products could theoretically reach $1 billion, though he acknowledges this oversimplifies the challenges. Success in this segment demands excellent cash flow management and inventory planning, as companies must often manufacture before receiving orders to avoid losing customers to competitors. The approach represents a pragmatic entry point for Indian companies to establish market presence before moving upscale.
2. Marketing and product management gaps present bigger challenges than technical barriers
India’s semiconductor industry no longer faces significant technical barriers. The country possesses sufficient design talent, with multinational companies contributing a significant share of the trained workforce over the years. However, the industry lacks people who can conceive products and bring them to market effectively. Most professionals in Indian operations focus on technical execution rather than strategic product development.
This problem stems from organizational structures where product conception typically occurs in the US, leaving Indian teams to execute predetermined strategies. Even sales professionals in multinational companies primarily work with given product portfolios rather than developing new market strategies. For startups, finding experienced marketing leaders who understand both product development and market dynamics proves extremely difficult. Madhusudan suggests business schools should address this gap by teaching semiconductor marketing as a core subject or strong elective. The challenge extends beyond hiring, as professionals from Western markets may not understand Indian pricing strategies and market conditions. This represents a fundamental structural issue that requires systematic addressing through education and experience development.
3. SoC generators represent practical solutions for faster market entry
Incore’s SoC Generator tool exemplifies the shift toward integrated solutions that address customer pain points. Rather than forcing customers to integrate multiple IP components from various vendors, the tool allows complete system-on-chip creation in a matter of minutes in some cases. Customers can combine Incore’s processors and fabrics with third-party intellectual property, generating test chips running on FPGAs within 30 minutes.
The tool reflects broader industry trends prioritizing time-to-market in an era of thin margins, particularly in embedded segments. Madhusudan emphasizes the platform’s vendor-agnostic approach, supporting competitors’ RISC-V cores and fabrics alongside Incore’s offerings. This flexibility stems from customer-centric philosophy rather than technological dogma.
Most current customers at Incore operate in industrial and automotive spaces, developing motor controllers, radar controllers, and IoT devices. While the architecture can handle more complex designs, Incore focuses enhancements on segments where they see customer traction. The tool addresses the reality that customers prefer spending minimal time on integration, instead focusing on their core product development and market entry. This represents a service-oriented approach to IP licensing that goes beyond traditional component supply.
4. Chip businesses require cash flow expertise as much as technical innovation
Madhusudan characterizes the chip business as about cash flow management as much as technology, particularly for companies selling fabrication-based products. Unlike design services or ODM companies that manufacture only after receiving orders, chip companies must often build inventory in advance to meet customer demand promptly. This creates complex cash flow challenges involving inventory management, demand prediction, and dealing with excess stock.
The business model typically requires maintaining portfolios of six to 20 products for small companies, demanding careful resource allocation decisions from product heads. Companies cannot survive as one-chip wonders in competitive markets. The technical aspects, including getting chips to manufacturing, represent the easier portions of the process. Success depends on understanding market dynamics, pricing strategies, and volume economics.
Startups entering commodity markets face particular risks, as competing purely on price leads to failure. Companies need defensible positions through specialized capabilities or market niches. This reality check contrasts sharply with typical technology startup thinking, where innovation often receives primary focus. For Indian companies considering chip manufacturing, understanding these business fundamentals becomes as critical as technical capabilities.
5. Quality focus drives Incore’s near-term development priorities
Incore’s immediate priorities centre on maturing and expanding SoC Generator adoption while strengthening customer support capabilities. The company has multiple pilot evaluations underway following the platform’s recent launch. Simultaneously, existing IP licensing customers require robust support through field application engineers, reflecting Madhusudan’s customer-centric philosophy.
Product development emphasizes horizontal feature expansion rather than pure performance increases. Customer feedback indicates demand for processors that move data faster rather than compute faster, addressing memory bottlenecks common in AI/ML applications. This customer-driven approach influences engineering resource allocation toward solving specific market problems rather than pursuing abstract performance metrics.
Quality takes precedence over feature quantity, particularly given Incore’s focus on industrial and automotive applications requiring reliable performance. Madhusudan prefers delivering fewer features with higher quality rather than compromising reliability for feature completeness.
Incore is developing functional safety capabilities, security features, vector processing, multi-core options, and a high-performance processor, named Dolomite, in the works.
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