BANGALORE, INDIA: The key issue facing the global semiconductor industry today centers around how soon the industry can rebound. Is there a way out of the problems the semiconductor industry currently finds itself in?

In an interaction, Abhi Talwalkar, President & CEO, LSI Corp., discusses the outlook for 2009, as well as three key things that the global semiconductor industry should do in 2009 to combat this current downturn. Excerpts:

CIOL: What's LSI's outlook for the Indian semiconductor industry?

Abhi Talwalkar: In the near term, the MNC India design centers will have to play significant roles. Their role is under appreciated and there are opportunities for them to grow further in current economic scenario. The captive capability will grow as the cost structure and talent availability remains favorable here.

CIOL: What's LSI's outlook for the global semiconductor industry?

AT: The near term outlook will be challenging given the downturn and the rapid softening of product  demand especially in PCs, handsets, servers, consumer electronics etc..

In the long term there will be positive growth in the semicon industry as the newer technologies gets adopted in new product categories, (automotive, healthcare, solar, consumer electronics, telecommunication infrastructure, etc.), and continued growth of electronic products, especially in India, China, Eastern European and BRIC countries.

CIOL: What are three things that semiconductor companies should do in this downturn?

AT: Semiconductor companies should carefully manage their expenses and conserve cash. They should develop conservative financial plans, which in turn will help them stabilize their balance sheets.

Companies with strong financial capabilities and strong balance sheet will look to become stronger through this downturn. They should try to accelerate their market share through innovative practices.

This should also be an opportunity for all companies to get closer to the customers, focus on their strategies and collaborate with them to help them come out stronger through this recession. Agility to innovate and meet with the customer requirements will help companies in developing a clearer focus on R&D and stronger executions.
 
CIOL: Is there going to be a drop in R&D, globally, due to recession? If not, then why these layoffs?

AT: There will be drop in R&D with reduction in top lines across industry. There will be reduction in R&D budgets as companies will look to manage their expenses carefully as well as balance sheets.

CIOL: Don't think India has a product development ecosystem! Why do you feel there is one?

AT: A product development ecosystem is dependent on the maturity of the end markets. The Indian market is growing and will continue to grow both in terms of consumer and enterprise demand. This growth in demand will enhance the product development ecosystem as it will rationalize the cost of development. India still needs to fill in a lot of gaps to have a stronger product development ecosystem within the semiconductor marketplace.

CIOL: Why haven't more startups happened in India, especially in semicon?

AT: Success of startups is dependent on the existing ecosystem. The growth of end markets will continue to encourage local ecosystem especially in regards to native systems companies in areas of semiconductors.

Currently, the system development is in its infancy in India, and with the growth of system MNC in India, it will grow.

CIOL: Is lack of exit options in semi, really stunting innovation, especially in EDA?

AT: No comments.