Semiconductor ecosystems are multilayered and cannot be created overnight. Citing China’s experience, Henry Joswa noted that despite massive state backing and scale, it took the country more than a decade to stabilise 28-nanometre manufacturing. “Trying to leap directly into advanced fabrication of 2nm or 7nm is not preparation, it is wishful thinking,” he cautioned. He insisted on focussing on ecosystem depth rather than racing against headline-driven announcements.
Phased Approach
The semiconductor value chain spans four distinct stages—design, fabrication, assembly/testing/packaging (ATMP) and equipment manufacturing. Henry Joswa pointed out that Tamil Nadu already holds relative strength in design, ATMP and system integration. These areas offer competitiveness without excessive financial risk. The state’s mature automotive and electronics manufacturing base, strong engineering talent pool and global capability centres provide a solid foundation to deepen these .
Rather than rushing to scale, Henry Joswa advocated a phased ecosystem model, where anchor companies lead the way, followed gradually by suppliers, service firms and a network of specialised MSMEs. “Ecosystems do not appear overnight. They typically take three-to-five years to mature,” Henry Joswa observed. Equally important is the need to pilot first and scale later. Small focused projects help build experience, reduce risk and create proof points that attract larger investments over time. Henry Joswa suggested that the state can reach around 30 per cent of Taiwan or China’s ecosystem density in design and ATMP in about three years with focused policy support. Bringing in around 10 large fabless anchor firms could generate nearly 20,000 jobs and attract USD 2 billion in investment, particularly across existing strengths such as automotive electronics, consumer products and industrial systems.
Following Returns, Managing Risk
Tamil Nadu’s semiconductor strategy must be shaped by a clear assessment of returns, risk and capital intensity. The strongest and quickest value creation lies in design and intellectual property, a talent-driven and highly scalable segment that offers 20–40 per cent margins through licensing and product development while requiring relatively low capital investment. ATMP follows closely, enabling faster market entry, 10–25 per cent margins and large-scale employment generation with manageable capex.
Semiconductor equipment manufacturing presents a strong medium-term opportunity, supported by steady global demand and 15–30 per cent margins, though it requires higher upfront investment. By contrast, full-scale chip fabrication involves capital expenditure exceeding USD 10 billion, long five- to ten year breakeven cycles, and comparatively lower margins due to yield and scale challenges.
Taken together, this ROI-led view suggests Tamil Nadu should prioritise design, advanced packaging, and equipment manufacturing first, building ecosystem and confidence before committing to the risks of large-scale fabrication. Henry Joswa stressed that SMEs and MSMEs must be part of the semiconductor story as supplier depth ultimately determines ecosystem resilience.
Learning from Global Models
“Tamil Nadu can accelerate its semiconductor ambitions by adapting proven global policy models in design and intellectual property,” pointed out Henry Joswa. Drawing from Taiwan’s ITRI–RCA licensing approach, the state can replicate full-stack IP transfer through the IIT Madras Semiconductor Centre and launch a TN Design Leap Scheme offering 60 per cent payroll subsidies and Rs 15 crore prototyping grants, while fast-tracking patents to 60 days. Lessons from the US CHIPS and science Act suggest introducing an IP Innovation Credit, providing 30 per cent tax rebates on EDA tools and IP licensing, alongside partnerships with global leaders to boost design capability. Meanwhile, adopting elements of China’s Big Fund model—through a Rs 200 crore state-matched Semiconductor Design Fund and mandating local IP usage in contracts can strengthen domestic ownership and scale Tamil Nadu’s design ecosystem sustainably.
As Henry Joswa concluded succinctly, “Confidence comes from doing a few things well and then building on them step by step.” For Tamil Nadu, that measured confidence may well be the difference between ambition and achievement.
