What does Indian semicon offer in this recession?

BANGALORE, INDIA: What does India offer to the semiconductor world in these times of recession? What should be done to get the buzz really back in the industry? These are questions I have been repeatedly. However, these topics still require some discussions at the macro levels.

I met up with S. Janakiraman, former chairman, India Semiconductor Association (ISA) and President and CEO-R&D Services, MindTree and quizzed him. Excerpts:

CIOL: What does India NOW offer to the world, in these times of a global recession?

S. Janakiraman: It is going to be a tough economic scenario for some more time to come. Cost of R&D, be it development or re-engineering or support is critical for survival of semiconductor companies, but those need to be done at lower costs. India will continue to be a cost leader to get more engineering done at same cost or same engineering done at lower cost. India will continue to be a safe haven for such investments.

India itself is a high growth market that will get sizable in the next five years for the semiconductor companies. No one can understand India and the emerging market requirements than the companies located here. That can be leveraged by the world to create value for money products that will serve the emerging market needs.

Indian companies are investing in technologies and creating intellectual properties/ building blocks of technologies. They are essential elements to create products/solutions in a shorter timeframe when the market starts recovering and builds appetite for consumption. Hence, Indian companies need to invest more in such areas and position themselves as value add vendors to source technologies.

The newer markets like electronics in healthcare and renewable energy space provides level playing field since our maturity level is no less inferior to the western world. We need to invest, create solutions and products that can establish India not only as a market, but also a leading technology provider for the global market.

CIOL: Some folks feel that the Indian semicon industry is losing way. Would you agree?

SJ: While the global consumption of semicon has seen a drastic drop in Q4 of 2008 and likely to see a negative growth in the first half of 2009, India will be one among the few markets that will see increasing consumption through sale of electronic products. The captive and design services companies serving the semiconductor market is facing a head wind, no doubt. However, the impact on them is much lesser compared to what is happening in the rest of the world.

With the Indian market continuing to grow while the global semiconductor market is declining, we may end up seeing a slower growth, but an increased market share. Hence, I see the dynamics in the market will lead to us gaining our way for longer term, though we can’t escape short term pains. When the recovery starts, India will gather much higher momentum of growth since it will be a lucrative market for selling and a lower cost market for sourcing for any global semiconductor players.

CIOL: What needs to be done to get the industry in India buzzing?

SJ: Don’t give up hope! Look at the Indian semiconductor industry as an opportunity to get into a level playing field than a losing ground. Consider India as a potential future market, look at and invest in emerging opportunities such as  healthcare/security/energy, and build products like telemedicine, surveillance systems and power management systems.

Most importantly, invest in idea creation and product management systems and get ready for the new model of business when recovery starts.