India’s First 5G Chip Faces Funding and Production Challenges

1. In December, 2024, India’s first-ever indigenous 5G and Internet of Things (IoT) chip, designed by WiSig Networks (a startup supported by IIT Hyderabad), is facing significant difficulties in moving from prototype to mass production.
2. Although this chip is a major step for India’s semiconductor industry, the Narrow Band IoT (NB-IoT) chip has encountered funding issues and low commercial orders, preventing it from scaling up and meeting market demand.
3. This chip, created mainly for smart meters used in the electricity distribution sector, has received close to Rs 45 crore in funding from the Indian government.
4. However, it still faces challenges in attracting commercial orders and completing the final stages of production.

Key Features of the Indigenous 5G Chip:

1. The NB-IoT chip was designed by WiSig Networks in collaboration with Cyient (a Hyderabad-based engineering company), and fabricated using Taiwan Semiconductor Manufacturing Company’s (TSMC) 40-nanometre process.
2. It is a System on Chip (SoC) and the first 3GPP-compliant modem SoC to be indigenously designed and successfully tested in India.
3. The chip has undergone several tapeout processes, which involve the final stages of chip design, resulting in the production of hundreds of chips that have completed 3GPP-compliant testing. Testing on Reliance Jio’s NB-IoT network is also ongoing at the IIT Hyderabad campus.
4. The Indian government’s Department of Telecommunications (DoT) allocated Rs 40 crore for two chip revisions and an additional Rs 5 crore for refining the third version of the chip (the Rev 3 tapeout).
5. The IT Ministry has further allocated Rs 13 crore to extend the chip’s functionality for satellite connectivity.
6. The chip is primarily targeted for use in smart meters within the electricity distribution sector, which would allow for remote monitoring and data collection.

Challenges Faced by the 5G Chip Project:

1. Despite successful design and testing, the chip faces mass production challenges. A 12,000-unit production tapeout is required, which is crucial for commercial-scale manufacturing.
2. The chip also requires the development of a production test program to ensure that it meets commercial standards.
3. However, WiSig Networks has reported a shortage of funds and is struggling to secure sufficient commercial orders to complete these activities.
4. A major bottleneck for WiSig Networks is the low commercial uptake of the chip. Without sufficient demand for the chip, the company cannot justify further investments in mass production.
5. The company is still in the customer evaluation phase, and it cannot proceed with full-scale production until orders are confirmed.

Government’s Policy Interventions to Boost Commercial Uptake:

1. Smart Meter Procurement:

   1. The Ministry of Power is exploring policy measures to encourage the procurement of domestically designed smart meters by electricity distribution companies (discoms).
   2. This could include mandating that a certain percentage of smart meters use locally designed chips, such as the WiSig chip.

2. Design-Linked Manufacturing Scheme:

   1. The IT Ministry is considering the introduction of a Design-Linked Manufacturing (DLM) scheme, which would provide support to Indian-made smart meters that use domestically designed chips.
   2. This would further promote the use of locally designed technology in critical infrastructure.

India’s Push for an Indigenous Semiconductor Ecosystem:

1. India is keen to develop a self-reliant semiconductor ecosystem, where domestic companies hold intellectual property (IP) for chip design. Chip design is considered a crucial aspect of the semiconductor value chain, requiring years of sustained research and funding.
2. Having domestic chip-making capabilities is also viewed as a strategic advantage, allowing India to prescribe the use of indigenously designed chips in sensitive sectors like defense and telecommunications.
3. The Indian government launched the Design Linked Incentive (DLI) scheme as part of a broader $10 billion incentive program for the semiconductor ecosystem, which was rolled out in December 2021.
4. The DLI scheme provides financial incentives and infrastructure support to domestic companies working on semiconductor design, including chips for integrated circuits, chipsets, and System on Chips (SoCs).
5. As of September 2024, the IT Ministry has approved proposals from 12 Indian startups under the DLI scheme, committing more than Rs 130 crore to their projects, which cover a range of applications, from telecommunications to AI hardware accelerators.
6. The run rate of the DLI scheme has been slower than expected, with the government initially projecting support for 100 startups over a 5-year period (around 20 startups per year). As of now, only a fraction of this target has been met.

Conclusion:

The WiSig Networks’ 5G chip represents a significant milestone in India’s efforts to build a self-reliant semiconductor industry. However, the project is currently facing financial constraints and a lack of commercial orders, which are hindering its ability to scale production. While the government has provided substantial funding through various schemes like the DLI, more policy interventions are needed to boost the commercial uptake of domestically designed chips. India’s ambitions to become a global leader in semiconductor design and manufacturing will depend on overcoming these initial challenges and fostering a more vibrant ecosystem for innovation and production.