Continental Device India (CDIL), one of the oldest semiconductor manufacturers in the country, has been in the news recently when it became India’s first Silicon Carbide components manufacturer. The new manufacturing line is scaled to make auto-grade devices, including Silicon Carbide MOSFETs, Silicon Carbide Schottky Diodes, Rectifiers, Zener diodes and TVS Diodes among others for the global as well as the domestic market.
What’s interesting to note is the fact that while the automotive industry has been a difficult customer as the focus was more on mechanical parts, the gradual shift towards higher electronic content and electrification opens up new avenues for business.
“In the last three years, the automotive industry has understood electrification is real and the supply chain on electronics is serious. The change we have seen in the sector has opened us to new suppliers, vendors and products. We have many customers in Coimbatore, Pune, Chennai, Tier 1, 2 suppliers, OEMs and even the aftermarket. The question is how quickly our parts get approved, lifecycle, warranty cycle obsolesce, etc. What we are seeing today is that the automotive industry is one of the fastest growing, it is not a very large segment for us today, it is around 10-15% of our business, but it is the fastest growing segment. Between 2021 and 2023, we have doubled the devices we supply to the automotive sector. We provided 8 million devices which became 15 million within a span of a year,” says Prithvideep Singh, General Manager, CDIL to Financial Express Online.
He is confident that in the next few years, the automotive industry will contribute at least 20-30 percent of the business.
Making chips in India for the world
The semiconductor industry is one of the most CAPEX-heavy and difficult segments to enter for new players. In fact, Singh says that there is a “very high learning curve in the semiconductor industry, which means it will take you 5 years to be competitive no matter what you do.”
He believes that it is easier “to create a prototype, but the magic is to move towards marginal costing, which is the real game changer.”
Singh says that this means that the pressure for manufacturers to offer competitive prices is very high. This is where he says the “governments have always played a heavy role, whether you talk about Japan, Taiwan, Germany and even the USA when it started.”
He credits the company’s Founder and Management for their vision back in the late 1980s, and early 1990s. “The reason we are here today is because we were globally competitive in the 1990s, which is why we are still selling and supplying to China. As we go forward, there will be a need for some technology tie-up for that 5-7 year has to be shrunk,” says Singh.
Expansion and IPs
While CDIL has managed to keep a low profile in the media, it has focused on upgrading its processes and products to be future-ready. In fact, even though it has commissioned a new line and scaled up the production of chips, the company is already gearing up for further growth.
Singh says “For the next 18 months we will add 100 million devices. That will be sufficient for the next few years, but we are not stopping there, our eyes and ears are open. We are waiting for the industry feedback, you ideally want the industry to qualify, to work with the industries. To understand where the industry is finding the supply chain gap, if that’s a troubled product for you or the world, is to understand why. For example, in the solar industry, where will you find 50-55 degrees Celsius outside? The same solar company that sells to Germany cannot sell to India because the conditions are vastly different. The demand on a global scale might be something else, in India it might be different. That’s why we have to work with our customers and partners to understand what their demands and needs are.”
So does it mean the company will focus investing heavily in developing new IPs (intellectual property), Singh has a unique response.
“It is a very difficult to give a number to this, as our business is not about that one big breakthrough. The semiconductor industry is a process business, wherein you continuously try to improve every process by 2-3 percent, which ultimately gives you a cost advantage. From that perspective, it is not a clearly IP’able thing. But it’s the know-how and knowledge that cannot be accumulated any other way. You can give all the funding, but it will take you and your team those many years to find that 2-3 percent improvement in all these different areas, which then all add up to a substantial number that allows you to lead in the market,” concludes an optimistic Singh.
