Friday, December 4, 2009

Raising India’s relevance in the semiconductor industry

Thanks to Mentor Graphics, (and my friends, Raghu Panicker and Veeresh Shetty) I participated in its User2User (U2U) conference today, in Bangalore (see pic).One of the keynotes at the U2U conference was from Pravin Desale, VP and MD India operations, LSI Corp., which focused on India’s relevance in the global semiconductor industry.

The global semiconductor industry is worth $250 billion and growing. Market forces are driving structural changes by creating sub-industries and also bringing many new opportunities along with it. India has benefitted by its increased participation and growing contribution over the past decade.

India possesses unique enablers to take advantage of the structural changes and that can greatly elevate its role in the future. India needs to cultivate these enablers.

The regional semiconductor revenue during 2007 was mainly driven by Americas 48 percent, Japan 21 percent, South Korea 11 percent and Taiwan 6 percent. The leading regions for semiconductor consumption during 2007 included China/Hong Kong 33 percent, Americas 18 percent, Europe 14 percent, South Korea 7 percent, Taiwan 4 percent and India 1 percent, respectively. Growth is more real in China and India.

Transformation has led to the emergence of new opportunities, industries and players. A horizontal industry of today comprises the foundry industry, CAD industry, third party design houses, fabless companies, and assembly and test. A very mature and large offshoring business has also emerged.

We have also seen the dawn of fabless IC companies. The growth of fabless companies has been strong — from around 500 in 1999 to around 1,350 in 2008. According to the GSA Dec. 2008 figures, distribution of fabless IC companies is: Canada 29, USA 606, Europe 151, Israel 61 and Asia 510 — China 222, Taiwan 196, Korea 47, Japan 16, Taiwan 16, Singapore 7, Malaysia 4, and India 2-28 (two fabless companies and 28 design services/IC providers).

Room for lot of growth in India
India has all the enablers to go higher. India has been growing as far the overall participation is concerned. Business continues to grow and has spilled into third party design and IP houses, and some into a few fabless companies, and assembly and test facilities. This means: there’s lots of room for growth!

Comparing the intrinsic enablers for China, Taiwan, Korea, Japan and India, China’s strength has been in systems manufacturing, Taiwan in ODMs and foundries, Korea in manufacturing and memories, and Japan in consumer electronics. India’s intrinsic enabler has been software.

For India, talent is the key ingredient to growth. As the features expectations from consumers continues to grow, so do the design complexities. India therefore needs to grow end-to-end capability. In this regard, nurturing talent is a collective responsibility.

India’s growing GDP offers an attractive local market such as consumer electronics, communications equipment, etc. Rapid growth is likely in semiconductor consumption. There have also been increasing local investments by systems companies.

Challenges do remain in India in terms of fewer large scale OEM investments, owing to factors such as a weak supply base of components, limited market size, and weak infrastructure and logistics facilities. India must extend innovation to product development!

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