Fabless chip companies and design-service firms that create chip designs and IP blocks - the first of Semicon 2.0's six pillars.
Designs the circuit (the 'IP') that a fab later prints on silicon. Fabless companies own the product and pay a foundry to make it; design-service firms do design work for others. India has a large chip-design workforce, but almost all of it works for foreign companies' products.
Design is where chip value is captured with the least capital. Semicon 2.0's design pillar adds milestone seed funding for startups (50% of project cost up to ₹15 Cr), royalty-based loans for larger companies (repaid as 5% of product revenue up to 1.5x the support), equity co-investment, and a 9% sales-linked incentive for 5 years capped at ₹30 Cr per product (ISM, Sep 2026).
Design services earn steady services margins; product companies can earn far more but need years of losses and customer wins first. Most listed Indian exposure today is services, with a few groups (L&T, Cyient) building product units.