What does 2013 have in store for the global (and Indian) seniconductor industries? Will it do better than 2012 or will it be even? I had a chat with Somshubhro Pal Choudhury, managing director, Analog Devices India Pvt. Ltd recently on this subject. First, I asked about the trends in the global semiconductor industry.
Choudhury said: "Consumer and telecom have driven the growth incessantly for the past decade for the semiconductor industry and will continue to do so. Over the next three years, industry analysts estimate the global industry will grow approximately 6 percent 2013-2016 CAGR.
"Portability and wireless connectivity will continue to drive a significant portion of the industry growth. Increasingly, automotive market is becoming very lucrative as the quantity of electronics going inside automobiles is increasing phenomenally in safety, power train, smart vision and fuel efficiency applications, not to mention the use of wireless connectivity.
"Medical electronics is getting smaller, smarter with better diagnostic technologies while the demand is increasing with aging population, increased longevity and lifestyle oriented diseases. Applications such as in-home patient monitoring will use wireless connectivity to stay in contact with physicians and emergency services.
"Industrial automation, energy and defense sectors are growing with more factory automation, solar energy focus worldwide, electronic warfare and so on. Intelligent, connected, and energy-efficient systems are leading to higher electronics content, with sensors and motors distributed throughout the industrial complex being connected wirelessly.
"Finally, the wireless and wired networks that transmit and receive all these channels of data will be a major driver of growth over the next few years with proliferation of 4G and increasing amount of fiber."
Outlook for 2013
How is the outlook for 2013 going to shape up? What are the technologies likely to make an appearance and why?
According to Chowdhury, the 4G LTE deployment should be a major applications area driving 2013. To that end RF, high-speed signal processing, and power management will be important technologies to advance the price/performance of 4G networks. MEMS technology continues to find new applications in medical, defense and industrial applications over and beyond the tablets, handsets, gaming consoles and airbag sensors in cars.
Will there be further consolidations within the industry? He added that M&A will continue to play a role in the industry. The companies in the industry are not hampered by their financial abilities to acquire businesses, but identifying complementary opportunities and successfully integrating them is not without risk.
And how does the global EDA industry look like doing in 2013? As per Choudhury, the EDA industry continues to innovate and that pace will continue in 2013. These innovations are not only driven by the challenges of moving to the next node, but also for mixed signal designs, in analog-digital co-simulation and verification domain.
Estimate of Indian semiconductor industry
Now, let's turn to the Indian semiconductor industry. Estimating the segment, Choudhury said: "The Indian semiconductor industry is actually three set of numbers. The consumption numbers are usually the figures quoted by all analyst firms as the other two are more tedious to track.
"Semiconductor consumption: This is related to how much of consumption of electronic systems in India across consumer, medical, industrial, automotive and communication segments both designed in India and imported systems.
"Estimates of the semiconductor consumption numbers range in the $8-$9 billion range and while several analysts have quoted growth numbers from single digits to as high as in the mid 20s, my analysis is in the 14-16 percent growth in the next three years based off the growth of electronics systems sales in India.
"Semiconductor bought in India: This is for local production of electronic systems in India. The electronic system might be designed elsewhere or partly in India, but the production of these systems is in India and hence the semiconductor chips are sourced or purchased in India.
"Design influence or designed in India: This measure is usually how the semiconductor MNCs in India measure their India sales. What is the amount of designs influenced in India? This includes not only the Indian OEMs who may design the electronic systems in India and produce them locally, but increasingly system design houses and India centers of MNCs. These designs are and usually manufactured elsewhere, but still are “Designed in India”. This category will grow significantly in the next three to five years.
Finally, what should be done to take the Indian industry forward in 2013?
According to Choudhury, this again depends on the above categories. The consumption numbers will grow based on the end equipment demand in the Indian market and will depend on the Indian macroeconomy.
To increase the purchase of semiconductors in India there are several steps initiated by the government to boost electronic system design and manufacturing (ESDM). Preferential access policies and offset clauses are being put into place and also there are discussions about having local fab infrastructure.
Large EMS companies setting up their production facilities in India are the key to increase the production and purchase of semiconductor chips in India.
In terms of design influence, we see strong growth primarily from the Indian arm of the MNCs and also the Indian design houses who are designing in India for their parent companies and global clients.
"Analog Devices is encouraging more system designs to be done in India by providing ready reference designs and circuits from the lab available to our customers, engaging with them during their design activities and also recently initiated Anveshan – a fellowship to nurture the system design skillset and expertise among the student community," he noted.