CIOL:Indian semicon industry Early steps taken miles to go!

Indian semicon industry: Early steps taken, miles to go!

Indian semiconductor design industry had a turnover of US $3.2 billion in 2005 with an engineering workforce of around 75,000. It is estimated to reach US $43 billion by 2015 and provide jobs to 780,000 professionals with a CAGR of around 30 percent for this period

Saturday, May 19, 2007

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Pradeep Chakraborty

According to the India Semiconductor Association (ISA), India's total semiconductor consumption in 2005 was about US $2.8 billion, met chiefly through imports. This demand is likely to exceed US $36 billion by 2015. Electronics -- whether it is office automation, consumer electronics, medical electronics, telecommunications or industrial automation, will require more of the semiconductor industry in India.

The major end user segments have been communications, IT and consumer electronics. Together, the important product sub-categories that would drive the semiconductor market in India are mobile handsets, wireless equipment, especially BTS equipment, which is gaining momentum, set-top boxes, and smart card terminals.

With its growing middle class population of nearly 400 million people which will only increase over time, India's electronic equipment consumption which was estimated at around US $28.2 billion in 2005, is likely to reach US $363 billion by 2015 growing at around CAGR 30 percent. The Indian electronics equipment domestic production was US $10.99 billion in 2005 and projects an opportunity to touch US $155 billion in 2015.

Statistically speaking, the Indian semiconductor design industry, comprising of VLSI design, board design and embedded software companies, has design companies across Bangalore, NCR Delhi, Hyderabad, Chennai, Pune, Ahmedabad and Goa. All of the global top ten fabless design companies also have India operations and 19 of the top 25 semiconductor companies are already present here as of early May 2005.

The Indian semiconductor design industry (i.e. VLSI, hardware/board, embedded software) had a turnover of US $3.2 billion in 2005 with an engineering workforce of around 75,000. It is estimated to reach US $43 billion by 2015 and provide jobs to 780,000 professionals with a CAGR of around 30 percent for this period.

The ISA-EY Benchmarking Study 2007 benchmarks the semiconductor design sector in India with peer countries on factors of importance to the sector and identifies important high level focus areas and actions to facilitate sustainable growth. Peer countries are Canada, China, Czech Republic, India, Israel, Taiwan, UK and the USA. Some of the main findings which clearly position as India as an attractive design hub are:

* Availability and scalability of talent
* Quality of talent
* Quality of technical education
* Talent cost advantage

The increased flow of international companies setting up their offshore design and development base and the ramping up of engineering human resource in the existing set up, including the non-captive companies is expected to drive the revenues for the total design market in India.

Gartner, as well as some others, do point out that the Indian semiconductor industry is still in a nascent stage. A policy has recently been announced to attract investments in semiconductor manufacturing. About five players announced plans and some have submitted proposals to the government. It will be at least another two years before things start rolling.

S. Janakiraman, chairman, ISA and President & CEO - R&D Services, Mindtree, elaborated the fact that the Indian government had, for the first time, come out with an exclusive policy for the semiconductor industry. This policy should provide significant boost to the manufacturing sector.

The ISA had closely worked with the Indian government to structure the policy to meet the expectations of the industry, while protecting the countries interest in terms of right size of investments as well as right technologies being deployed. The impact of the policy on the manufacturing sector will take time, but when it does becomes reality, it will create significant positive impact for the semiconductor sector.

There is also a clear interest by all leading IDMs as well as fabless semiconductor companies in looking at India as a destination for complex design sourcing, as well as increase their market share in a growing market. Manufacturing of electronics has seen remarkable progress in the last 18 months with majors such as Nokia, Motorola, Flextronics and Foxcon now investing in India. Similar thrust in investments in semiconductor fabrication, test and packaging is not far away.

This isn't all! Technologies are fast evolving and mixed signal is becoming reality. Geometries of semiconductor technology is also shrinking, from 90nm to 55nm and even 35nm. Not only that, India is now in a position to talk about a multilayered chip or a 3D chip.

Pradip Dutta, president, Synopsys, believes all local and global majors based in India are poised for growth. It is expected that the global majors would continue to leverage on the talent available. There will likely be even more emphasis on high-end design as well as determining the go-to-market strategy.

Whether it is the frequency, number of gates, high complexity, etc., all of those would be driven by applications. India is now ready for doing high-end complex designs.

All of this really augurs well for the Indian industry. According to Kamal Aggarwal, VP - Marketing and Strategy, Softjin Technologies, the semiconductor market, globally, is likely to grow close to 10 percent during 2007 . In India, it is likely to grow much faster due to high growth in electronics consumption, maybe, in the region of around 30 percent.

However, some feel that fabless is the best way to go, in order to tap our engineering talent in chip design and let the foundries in Mainland China and Taiwan give India the best wafer prices and help us keep up with ever reducing geometries. They have the infrastructure for this R&D and we (India) have the engineering talent. India should encourage fabless semiconductor chip companies (product companies), give them concessions and tap into the US $300 billion semiconductor component market as well.

CIOL Bureau

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