Indian semicon industry poised at very interesting juncture: Dr. Pradip Dutta, Synopsys

I have known Dr. Pradip Dutta, corporate VP of Synopsys Inc. and MD of Synopsys (India), as well as vice chairman, India Semiconductor Association (ISA), and now, chairman designate for 2011, ISA, for close to a decade now. We recently got into an interesting discussion on the Indian semiconductor industry.

Growth of semicon and electronics in India
First, I asked what should be done about the growth of semiconductors and electronics in the Indian eco-system?

Dr. Dutta said: "My view on this subject has been the same for many years now; high-tech electronics has to be a national mission. The defense and the government labs played a major role in promoting this sector in the US; e.g. Sandia National Laboratory, Lawrence Livermore Laboratory, Jet Propulsion Laboratory, NASA etc. DARPA, which is part of US Department of Defense has sponsored phenomenal amount of research in semiconductors and electronics.

"If we now look at countries closer to our part of the world, in Asia, we will see a similar focused effort from the governments. The STARC initiative in Japan, the National SOC program in Taiwan, the 839 program in Korea, the 863 program of Ministry of Science and Technology in China, all catered to a flourishing investment in R&D and innovation in high tech. Our country is poised for it too. We need to encourage start-ups in fabless design, explore manufacturing, foster innovation, create favorable policies for the industry and most certainly develop the talent pool."

Need for domestic manufacturing
There is a need for domestic manufacturing in high tech electronics. Where are the Indian companies going? According to him, domestic manufacturing in high tech electronics has been flagged as a critical area in the ESDM (Electronic Design and Manufacturing) report that was submitted to the government by the industry in 2010. There is a need for initial funding, both in R&D as well as manufacturing. Duty structures need to be rationalized between import of CBU, SKD, CKD and components.

He added: "We have seen that manufacturing prospers in cluster environment and hence there is a recommendation to promote manufacturing clusters for specific product categories. However, it is safe to say that we have long ways to go in this area."

Co-operation with international trade bodies
Now, what is the required policy framework and co-operation with international trade bodies? As per Dr. Dutta, the ISA has been active in forging close working relationships with multiple trade bodies from various parts of the world. "We have signed several MoUs with entities such as HTIA (Israel), ASTSA (Japan), DSP Valley (Belgium), TSIA (Taiwan), Semi (USA), GSA (USA) and UKTI (UK).

"Of course, we need to have a focus and these relationships should be driven by strategy. We have carried several delegations to these countries and hosted bi-lateral visits as well. These visits provide an opportunity for our member companies to have direct B2B opportunities.

"We learn valuable best practices from other entities and try and implement in our environment. For example, Israel does a great job in taking innovative ideas from entrepreneurs to incubation, many times inside of universities, and then spinning them into companies which later become part of the global value chain. In the process, this small country has created at least 150 NASDAQ listed high tech firms. Innovation to incubation to wealth creation – a formula that works very well there. We could certainly learn a lot from that model."

Future of Indian semicon industry
So, how does Dr. Pradip Dutta see the Indian semicon industry, going forward? He said: "The Indian semiconductor industry is now poised at a very interesting juncture. While the MNCs are designing chips at the bleeding edge, we see a lot of high quality work being done by the design service companies and also local start-ups. Incidentally, the start-up scenario is quite active in the system space. This ties in with the ESDM focus of our industry.

"India’s semiconductor industry will no longer be in isolation with respect to its market. Companies are not investing in India for the intellectual capital but also to gain a share of the rapidly evolving domestic market. There are quite a few home grown indigenous products being worked on, as we speak, to challenge the leading smart tablets. This is a very encouraging sign for our industry."

Fabs in India?
Are there any hopes for a fab in India, or shall India give up that idea? Dr. Dutta said that this question has been making the rounds for a few years now since the SIPS policy got announced in 2007.

"Although there were one or two initial expressions of interest in building a semiconductor fab in the country, none of the proposals eventually materialized due to a variety of reasons, lack of financial closure being one of the most important ones. Meanwhile the policy window of three years has expired and there is an effort to come out with a modified version.

"While most policies start with investment thresholds and government subsidies, we need to understand a fundamental element of the fab business. Because of its inherent capital intensive nature, private entities will come in only when there is a clear business case. However, there are other compelling reasons also as to why our country needs to explore the need for a fab.

"Beyond business, there are strategic reasons. Security and supply chain self-sufficiency come to my mind immediately. I would say that it’s far from over for India. What we need is a more focused approach where we hear directly from successful foundries and IDMs about what created the winning strategy for their businesses or for their countries, and then do a thorough study of whether that applies to us."

Synopsys' performance
Finally, how has Synopsys done in the last year? What are its focal points for this year? According to him, Synopsys weathered the recession well, and delivered strong results and customer value. "We have further solidified our customer relationships, invested in our R&D to strengthen our product portfolio and maintained strong financial performance.

"While we continue to deliver strong technology in our core EDA platform around verification and implementation, we have also expanded our TAM (Total Available Market) through our investments in IP & Systems and also a new adjacency - optics.

"We are the second largest silicon IP company in the world, and are also focused on solving our customers' growing challenges at the intersection of the chip and rapidly growing software. Our objectives include continuing to provide best-in-class technology in core EDA, investing in adjacencies such as IP and Systems, and delivering solid financial results."