Founded in 2023, with barely a year into business, Sagar Semiconductors says its ready to challenge the behemoths in the power semiconductor business in India with its MOSFETs and IGBTs. In a conversation, CEO Kedar Reddy reveals his strategy to conquer the market to EFY’s Yashasvini Razdan.
Q. How did you identify the opportunity in semiconductors, and what led you to focus on power semiconductors?
A. I started scoping out the market for various opportunities. I had a certain thesis about where India was headed. We wanted to be in manufacturing, that was number one. Number two, we wanted to be in a sector with significant domestic growth opportunities and the potential for exports in the future.
Lastly, we wanted to focus on industries that had geopolitical support based on the environment, whether in terms of trade or other factors. Looking at all these aspects, we narrowed it down to a few opportunities, and semiconductors were definitely one of them. With the support of my mentor and family friend, Mr Balapathyappa, who has been in the semiconductor space for many decades, we started looking for the right partners and the right strategy to develop.
Q. How does Sagar Semiconductors categorise itself — are you an independent design house or an ODM?
A. We are a fabless company focusing on power MOSFETs and IGBTs. While currently our products are getting manufactured out of India, our plan is to localise manufacturing initially through partners, such as the outsourced semiconductor assembly and test (OSAT) units that are being set up, like ASIP or Kaynes, among others. Then, for high-volume products, depending on the demand we generate, we may selectively manufacture in-house as well.
Q. What product market segments are you catering to and why?
A. We are focusing on the power side of semiconductors, as I said, specifically power MOSFETs (metal–oxide–semiconductor field-effect transistors) and IGBTs (insulated-gate bipolar transistors). This sector is experiencing tremendous growth and it is a part of the market that is not as widely spoken about. Everyone talks about Nvidia and Qualcomm, but no one really talks about this segment, even though it constitutes a significant portion of the industry.
We wanted to carve out a niche within semiconductors rather than follow what everyone else was doing. Even within MOSFETs, there is a range to consider, including a wide voltage range, different packaging types, and a variety of end applications. Despite that, producing these chips is relatively simpler compared to manufacturing MCU and GPU chips, which will take more time for India to develop. This is how we arrived at this focus area.
Q. Is there any specific business model you follow?
A. It is a combination of different approaches. There are a few types of customer requirements we deal with.
For some customers, there is an existing product that they want us to replace. In such cases, it is mostly about component selection. In other cases, it is a completely new design. Here, we are not only providing input on which components to use but also contributing to the overall design itself.
Then, there are customers who require an entire design. For example, they may ask us for a reference design for a battery management system (BMS) or a motor controller, and we provide them with a complete design incorporating our components.
Lastly, there are completely custom requirements, where a customer approaches us with specific parameters and asks if we can develop a part that meets their needs. In such cases, our local team handles most of the activities in-house. However, for certain specialised areas where we do not yet have the capabilities, we collaborate with our partners in Taiwan and Japan.
Q. Is all your manufacturing happening in Taiwan?
A. Yes, currently our products are manufactured in Taiwan. However, by this coming year, we plan to start localising some of the manufacturing processes. We are already in discussions with a few companies in India to begin handling packaging for us.
Once packaging is done in India, the product will qualify as Made in India.
Q. Could you elaborate on your established infrastructure in India?
A. We have built a team of 15 in Hyderabad, consisting of design engineers, field application engineers, and a sales team. We also have a small office in Bangalore. With the support of the Sagar Group of companies—our family business, which includes listed companies such as Sagar Cement and Sagar Soft, along with other companies involved in power and related sectors—we are committed to this business for the long term. We understand that it will take time, but we are here to stay.
Q. Are all of your team members technical engineers, or does the team include salespeople as well?
A. It is a mix, but it is mostly technical. Even our salespeople need to have technical knowledge because this is not a product that can be sold by just anyone. Our team consists of field application engineers, design engineers, and sales and business development professionals. But all of them are either technical or at least semi-technical.
Q. Who is going to be your target customer? Can you categorise them for India and global markets?
A. First, there is the electric vehicle (EV) segment, which itself has multiple subsections. Within EVs, you have chargers, DC-DC converters, BMS, and motor controllers. We will cover all these areas. So far, we have gained strong traction, particularly in motor controllers and BMS, due to the high number of MOSFETs used in these applications.
Next is the energy storage sector, which includes battery management, energy storage system (ESS) solutions, and uninterruptible power supply (UPS) systems. Within this category, the two primary areas are BMS and inverters, both of which require switching devices, typically MOSFETs or, in some cases, IGBTs.
The third category is renewable energy, which includes applications such as solar inverters and solar charge controllers.
We are also targeting consumer applications, which is quite a broad category. This segment includes brushless DC (BLDC) fans, lighting, and various consumer electronics. It is a scattered category with a wide range of products, but the underlying trend is a significant shift from alternating current (AC) to direct current (DC). As this transition happens, the demand for switching components will continue to grow. One of our customers in this space is Atomberg.
Q. Which is the customer persona you target when speaking to your customers and why?
A. Our approach has been very much focused on targeting research and development (R&D) teams. While this route takes longer to gain traction, it helps build credibility with design engineers, which is important.
When you go through the R&D route, you need to earn the trust of the design teams, which takes time. In contrast, the purchasing route is more transactional—it is simply about whether the product works and at what price. It is not that there is no value in this approach, but the value is primarily commercial, based on factors like better inventory management or favourable credit terms.
In that area, distributors—who have long-standing relationships—hold a strong advantage, especially in India, where the market is distributor-dominated. That is why we have chosen to focus on R&D. We have strategically selected a few large companies and invested heavily in building strong relationships with their teams. It is not just about engaging with a single engineer but about becoming ingrained within the entire team.
Q. How do you engage with R&D teams? What is your pitch to them?
A. First, many people are still surprised that an Indian company is designing its own MOSFETs. Their initial assumption is that we are just another distributor. Our pitch starts with localisation—first in terms of design and, eventually, in terms of manufacturing. The second key factor is what we call customer intimacy. We provide hands-on support and collaboration that large multinationals or distributors do not offer. When dealing with large multinational players like Infineon, STMicroelectronics, or Onsemi, customers often feel like just another account in a massive system. These companies have excellent products, but their scale means they cannot always provide the level of service and support that Indian customers need. This is one of the reasons why distributors have been successful in India—they fill that gap.
We position ourselves as a local partner that understands the Indian market, the industry challenges, and the specific applications our customers are working on. Unlike big companies, where introducing a custom part requires a long, global-level strategic decision, we can develop custom parts in as little as three months, provided there is a viable business case.
Q. Many Indian component distributors and power semiconductor manufacturers offer similar custom design services. What sets you apart?
A. A distributor might pitch one product today and another tomorrow, based on what is most profitable at the time. Similarly, global semiconductor giants often prioritise markets like the US or Europe, where they can command higher margins. Their approach is often: This is our price—take it or leave it. There is no middle ground, no real effort to collaborate or co-develop solutions with customers. We primarily work directly with customers, though we can also go through distributors when needed. This approach not only ensures better service but also provides a pricing advantage.
Of course, custom parts only make sense when there is strong market demand or when the customer is willing to pay a premium. Indian customers generally resist paying extra for custom solutions, so the decision must be volume-driven. However, we have already developed custom solutions for customers in the past and continue to do so with quick turnaround times.
Q. Are you into mass production currently? If not, how do you balance the cost with lower volumes, given that India is a cost-sensitive market?
A. No, we are not in mass production, but since we operate in a fabless model, we are not limited by volume, as we own the design, and so we can get the product manufactured wherever we choose.
In fact, the types of companies we are working with have annual volume requirements in the millions. That is the scale of business we are targeting.
Q. Are you only targeting big companies with large volume requirements, or will you also cater to MSMEs and startups with lower volume requirements?
A. Of course, we will work with medium-sized customers as well, but our primary focus is on larger customers. The reason is simple—when we invest a large time and effort working with R&D teams, it needs to be justified by the business potential.
That being said, we are not completely ruling out smaller or medium-sized customers. But from a strategic standpoint, our focus remains on larger customers where the impact of our efforts is maximised.
Q. How does a new entrant in the power semiconductors business deal with competition from the biggies in this business when it comes to cost and quality?
A. Regarding pricing, we always benchmark ourselves against leading global companies like Infineon, STMicroelectronics, and Onsemi. When we provide our components to customers, they test our products, and the results consistently demonstrate that our quality matches—or in some cases, even exceeds—that of these global players.
For example, one of our customers in Sweden tested our component against an Infineon part in the TOLL package, and our part outperformed Infineon’s in that specific test. We use such test results to let the product speak for itself.
At that point, the customer does not expect us to match Infineon’s pricing, but we also ensure that we are not compared to the low-end segment of the market. There is often an expectation that an Indian company should offer Chinese-level pricing while delivering premium performance, which is not always a realistic combination. That is why we position ourselves by benchmarking against the top players while still offering a clear cost advantage compared to them.
Q. Any partnerships that have helped you in getting started with this business?
A. After extensive discussions, we finalised a couple of partners. We spoke to almost every major semiconductor company in Taiwan, Japan, and even a few in China. Ultimately, we found partners willing to share their technology and collaborate with us. Initially, we partnered with CET in Taiwan. As we move forward, there will be potential announcements regarding this relationship and how it is progressing. We also signed an MoU with Hitachi on the high-power side.
With these two partnerships, we developed a portfolio covering a full range of applications, from as low as 30 volts to very high-power applications, including those for railways. That is how we started.
Our idea was to have a partner that could give us a foundation to build upon. When starting from scratch, you either need a breakthrough product—whose success is unpredictable—or you must have a portfolio offering different solutions to customers.
Q. Can you share your current and target partnerships? Are you focusing more on customers or technology collaborations?
A. In terms of customers, we are particularly excited about the BMS and motor controller markets. Some of our current customers are leaders in motor controller technology. While I cannot share their names without permission, they are well-known in the industry, and we are very confident in the value we bring to this segment.
Within the EV sector, these types of customers are highly attractive to us. Similarly, in the UPS market, there is a shift happening from lead-acid-based systems to lithium-ion and sodium-ion-based systems. We would love to work with customers in this space as well, since the demand for inverters and BMS solutions is expected to ramp up significantly.
Additionally, we are interested in collaborating with design houses that develop and sell their designs or operate under an original design manufacturer (ODM) model. This would allow us to integrate our solutions from the ground up. Expanding our business requires a multi-pronged approach, and we are committed to engaging with the right partners across these segments.
On the supply chain side, we are very confident in our existing partnerships. As I mentioned, we are expecting to make a major strategic announcement by the end of this month regarding a potential joint venture (JV) with one of our partners. We believe this will be the first of its kind in India, and it represents a strong commitment to our partners and the industry.
That said, we are also actively looking for high-quality local OSAT providers to help us package our products within India. This is an area where we could use more support. The Indian semiconductor ecosystem is still in its early stages, so we need to build this step by step while supporting each other in the process.
