Key drivers of electronics in India: Francois Guibert, ST

One of the industry keynotes on day 1 of the recently held ISA Vision Summit featured François Guibert, corporate VP and president, Greater China & South Asia Region, STMicroelectronics.

François Guibert, corporate VP and president, Greater China & South Asia Region, STMicroelectronics.

According to Guibert, electronics is key for the wealth of nations as most industries and services will be unable to operate in its absence.

Electronics also generates more added-value than any other manufacturing industry. It provides three times more jobs than it generates. It also accounts for 30 percent of the fixed asset investments of the overall industries. Guibert added that the electronics industry will continue growing more than twice the world’s GDP in this decade.

Commenting on India’s electronics landscape, he said the domestic electronics demand was 3-4 percent of the global consumption, or approximately, $48 billion in 2009. This comprised 9 million STBs, 125 million 2G/3G handsets, 8 million desktops and laptops, 17 million TVs, and 1.5 million cars.

India’s electronics manufacturing revenue was worth $26 billion in 2009, which is slated to rise to $43 billion by 2013, at a CAGR of 10.7 percent over the next five years.

The present situation of India, includes a huge local market with strong growth prospect, Asian dynamism, large clusters of local companies, cost competitiveness, huge pool of IT resources, good educational system and high English literacy. The current market drivers include digital STBs, digital security, lighting, automotive, metering system, etc.

In future, the mega drivers or trends are going to be green electronics, biomedical electronics, advanced security and advanced connectivity.

In green electronics, the key areas to watch out are energy harvesting, green lighting, green automotives, plastic electronics, green appliances and green computing. In biomedical electronics, the key areas would be body gateways, medical equipment and biosensors. Here, Guibert highlighted the role of MEMS as an emerging enabling technology.

Advanced security would include physical seurity, infosecurity and electronic security systems, eventually leading to system integration with a combination of components for comprehensive security systems. Advanced connectivity would entail high-speed wireless connectivity and multimedia convergence.

He added that electronics is now at the center of the industrial policy of nations. Nations are launching strategic programs through R&D in electronic systems and also reinforcing the strategic programs through R&D in semiconductors. Guibert cited Taiwan’s example, with the country having gained leadership in PCs and peripherals and semiconductor foundry manufacturing.

BRIC countries and other emerging nations possess tremendous potential for electronics and semiconductors. Two points would be very crucial — R&D and manufacturing.

So, what are the ingredients for success? One, focus on key electronics applications, such as consumer, telecom, PC, industrial, etc. Other critical factors include — government focus, strong R&D efforts, industry partnerships, as well as regional economic success — competitiveness of the local electronics industry along with semiconductor innovation and integration.

Global semicon industry update: 30 percent growth now on radar for 2010, says Future Horizons

Here are the excerpts from the Global Semiconductor Monthly Report, January 2010, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. The report also covers market trends. Those interested to know more may contact Future Horizons.

November’s IC sales continued the year-end rally, down just 2.4 percent on October, up 29.3 percent vs. November 2008. This confirms our earlier prediction that Q4-09 sales would be up around 6.4 percent on Q3-09, one of the strongest year end-closes on record – Q4 sequential growth is typically ‘zero plus minus 2 percent’.

This confirms that 2009 will come in close to our minus 10 percent forecast, most probably at minus 9.7 percent, setting 2010 up for a bumper double-digit growth year. Only a Lehman Brothers-type event can now derail the recovery, the future is bright, and not before time too. For far too long now doom and gloom has spoilt the chip market horizons. Industry faith has been stretched beyond the limit.

Ignoring the structurally (and typically) wild individual monthly fluctuations – which simply means no single month’s data is a good indicator of the underlying trends – November’s result places us comfortably within our minus 10 percent 2009 growth estimate.

Based on November’s WSTS data, it is now very difficult to see anything less than a 22 percent growth year for the semiconductor market in 2010 based on the current industry momentum (i.e. a fourth quarter growth of around 6.4 percent) and a very ‘average’ quarterly growth pattern for 2010. Indeed we are now starting to see the first industry guidance revisions that tend to indicate even this range might be low. If the current growth momentum holds firm, 2010 chip market growth could easily hit 30 percent.

Low double-digit growth is totally out of the question, growth in single digits an absolute impossibility, Figure E3. Either of these scenarios would need a very poor start to the year, which is simply not happening. Order books are strong, inventory levels are low, capacity is tight and demand is holding up. You could not wish for a better start to the year … what a difference from this time 12 months ago. Only a massive economic collapse can now spoil the party.

As we mentioned before, only a massive economic disruption like a Lehman Brothers bankruptcy can now derail the recovery and this is not being forecast by the economists. Quite the opposite, GDP data is trending more and more positively, with an upwards revision at the macro level more likely than not. This is not to say that the economic recovery is not fragile, it is far from out of the woods and many risks still remain.

Of the ‘not so good news’, to our minds the biggest single problem is the world’s financial systems remain unreformed and, worse still, unrepentant. This means the same issues that caused the global financial problem in the first place remain unchecked. In 1929, Wall Street’s shamed bankers jumped from their office windows. In 2009 they stood in line for their bonuses. From a chip market perspective, a sound economic base is important but the correlation is poor.

Whereas a collapsing GDP will trigger a chip market downturn, just as it did in the 2001 dot com bust and September 2008 Lehman Brothers collapse, the rates of recovery are independent of each other. For example, the economy recovered faster than the chip market after 2001 whereas the chip market is leading the recovery in 2009.

The extent of the market collapse can be gauged by looking at the peak to trough data, showing over one third of the chip market simply disappearing overnight. Except ASPs, despite this massive decrease in demand, ASPs help firm, in fact they rose a modest 1 percent. One year after the chip market collapsed, units and value have now recovered to 98 and 90 percent respectively of their Q3-08 (market peak) value, with ASPs coming in just 8 percent lower.

This is quite an extraordinary recovery, seeing as it took a full two quarters more for the world to exit recession. It happens though because there was no chip market bubble prior to the downturn.

With the memory market now in full flood of recovery – we can easily see an upside potential of a $60 billion market for 2010 – and memory prices increasing with barely a flinch from the market, 2010 is set to be a very good year for the industry. The only problem is that no one yet believes it.

Confidence has been shattered ever since the 2000 bust, with a glass half empty mindset dominating collective thinking. “Market growth is now single digit; ASPs will keep on falling; Where are the killer products to drag the chip world out of recession; We need to specialise, merge, narrow the R&D scope, cull the product line and above all dump all the fabs; outsource for capital and operating efficiency; etc”.

Well, to coin a phrase once used by Jerry Sanders III, “Nuts!” It was only 2004 when growth hit 28 percent just after an 18 percent growth in 2003. Better get planning now, it’s already too late.

ISA Vision Summit 2010: Karnataka Semicon Policy 2010 unveiled; great opportunity for India to show we mean business!

Karnataka Semicon Policy 2010 released at ISA Vision Summit 2010 by Hon’ble Chief Minister of Karnataka, B.S. Yeddyurappa and Hon’ble IT and BT Minister, Katta Subramanya Naidu, along with B.V. Naidu, chairman, ISA and other dignitaries.

The much awaited Karnataka Semicon Policy was released today at the ISA Vision Summit 2010 by the Hon’ble Chief Minister of Karnataka, B.S. Yeddyurappa and Hon’ble IT and BT Minister, Katta Subramanya Naidu, along with B.V. Naidu, chairman, ISA, and chairman and CEO, Sagitaur Ventures India Pvt Ltd, and other dignitaries.

Way back, on 25 July 2008, it was first mentioned that Karnataka could have its own semicon policy, as announced during the ISA ExCite event that day. The state semicon policy has taken own time coming — a little over 18 months!

Well, better late than never! The Indian state of Karnataka now has its own semiconductor poilcy, which was unveiled today at the ISA Vision Summit by the IT Department, Government of Karnataka, along with the ISA.

Karnataka’s target: $120 billion by 2020
Prior to the policy’s release, B.V. Naidu said: “The ISA welcomes the Karnataka Semicon Policy and we are happy that most of our recommendations to the government have been considered. This policy will play a significant role for achieving $120 billion electronic system design and manufacturing industry to grow in Karnataka.”

This means: of the national target of $400 billion by 2020 set by ISA for the Indian semiconductor industry, the Karnataka state is expected to achieve 30 percent!

Karnataka semicon policy features
Am very sure a lot of you are very keen to know about the policy! Presenting the salient features of the Karnataka Semicon Policy 2010.

Hon’ble Chief Minister of Karnataka, B.S. Yeddyurappa, highlights key points of the Karnataka Semicon Policy 2010.

* To encourage setting up of semiconductor units in tier-2 cities, other than Mysore, Mangalore, Hubli, an incentive of investment-promotion-subsidy would be provided in accordance with the Karnataka Industrial Policy 2009-2014.
* Govt. of Karnataka would provide additional amount of Rs. 25 crores, toward 26 percent contribution to the KITVEN (Karnataka IT venture capital fund) IT Fund for raising funds from the market to assist startup semiconductor units engaged in design and embedded software.
* Govt. of Karnataka would provide financial assistance to firms for filing IP in accordance with the incentives provided in the industrial policy.
* Govt. of Karnataka will provide assistance of 50 percent of the total cost toward purchase of proposed equipment for augmenting the Orchid Tech Space in the STPI to a Characterization Lab. The remaining funds would come from the industry or mobilized through PPP business model. This Lab will be a one-stop solution for hi-tech facilities and will spur growth of R&D in future technology without financial burden to budding entrepreneurs.
* ATMP units will be encouraged with special incentives in the proposed ITIR near BIAL (Bangalore International Airport), Bangalore. (Special incentives for ITIR to be announced separately).
* Govt. of Karnataka would provide all encouragement and assistance to the solar PV manufacturing units under the Karnataka Renewable Energy Policy.
* To encourage setting up of ATMPs in the state, Govt. of Karnataka would provide incentives to units set up in the state by lowering the threshold investments for ATMPs/ecosystem units with investments above Rs. 400 crores and up to Rs. 1,000 crores. Incentives would be provided on a case-to-case basis approach based on specific employment potential.
* As a policy support, to encourage innovation and R&D in chip design, product development, telecom, etc., the Govt. will set up a fund known as ‘Karnataka Fund for Semiconductor Excellence’ of Rs. 10 crores. This fund will be available to the private companies covering up to 50 percent of their R&D expenses, subject to a limit of Rs. 10 lakhs per unit. This financial assistance would be subject to repayment of 10 percent of the profit (after tax) annually for a period of 10 years. Preference would be given to fresh engineering graduates by identifying talent through projects submitted in the college and start-up companies.
* A committe comprising of representatives of VTU, ISA, industry, scientists, and financial institutions would be set up to monitor the activities and functioning of the fund.
* Karnataka Power Corp. and Karnataka Renewable Energy Development Ltd would take steps to develop solar farms on joint ventures/PPP mode in Bijapur, Gulbarga, Raichur and Bellary districts.
* Govt. to set up a focused school under IIIT at a cost of Rs. 10 crores and strengthen the research labs in the institute at a cost of Rs. 5 crores with a contribution of 25 percent from the industry.
* Fiscal incentives would be provided to semiconductor units as per the Karnataka Industrial Policy 2009-2014.
– Investment promotion subsidy.
– Exemption from stamp duty to MSME, large and mega projects.
– Concessional registration charges to MSME, large and mega projects.
– Waiver off conversion fine to MSME, large and mega projects.
– Exemption from entry tax to MSME, large and mega projects.
– Incentives for export oriented enterprises for MSME, large and mega projects.
– Subsidy for setting up ETPs to MSME, large and mega projects.
– Interest free loans on VAT to large and mega projects.
– Anchor units subsidy to first two manufacturing enterprises with minimum employment of 100 members and a minimum investment of Rs. 50 crores.
– Special incentives for enterprises coming up in low HDI districts for large and mega projects.
– Interest subsidy to micro manufacturing enterprises.
– Exemption from electricity duty to micro and small manufacturing enterprises.
– Technology upgradation, quality certification and patent registration for micro and small manufacturing enterprises.
– Water harvesting/slash conservation measures to small and medium manufacturing enterprises in all zones.
– Energy conservation, small and medium manufacturing enterprises in all zones.
– Additional incentives to the enterprises following reservation policy of the state.
– Refund of cost incurred for preparation of project report for micro and small manufacturing enterprises.

Now, let’s take a look at what the Karnataka Semicon Policy 2010 achieved and areas that need clarity!

ISA Vision Summit 2010: UK intends to be part of India’s growing electronics market

The UK is a country partner with the India Semiconductor Association (ISA) at the ongoing ISA Vision Summit 2010 for the second successive year. Delivering his address during the inaugural function, Richard Hyde, British deputy high commissioner, said: “The UK is partnering this event because we want to be part of the growing electronics market in India. We see the changing ICT landscape. We see the move from low end outsourced services to high value business, driven by innovation.”

Richard Hyde, British deputy high commissioner, delivering his address at ISA Vision Summit 2010 in Bangalore, India.

He added: “We have an ongoing and long-term commitment to working with the Indian semiconductor industry. We want to promote growth through partnerships with UK innovation and excellence. The UK and Indian semiconductor industries working together have enormous potential to create a powerful solution for customers in India, the UK and the rest of the world.”

The UK electronics industry is about £25 billion a year. It is made up of more than 11,500 companies employing about 250,000 people. UK is the acknowledged leader in independent systems design with over 40 percent market share.

Hyde presented some examples of UK’s innovative industry, such as CamSemi — a spinoff from Cambridge University, which provides power conversion solutions to make electronics industry ‘greener’; DisplayLink — a pioneer in connecting multiple screens to one PC through USB; and PicoChip — experts in wireless infrastructure and signal processing. Several of UK’s semiconductor companies also have strong presence in Bangalore, India, such as ARM, CSR and Wolfsen.

He said that the UK has a vibrant start-up community that supports strong industry clusters in the South West of England, Central Scotland and Cambridge. Experts from these regions are present at the ISA Vision Summit for discussions.

Hyde added that the UK’s consumer electronics market is the strongest in Europe. Sales of flat panel and LCD TVs hit £8.8 million in 2008. Despite the downturn, there has been further growth in 2009. Blue ray players and HD based technology have continued to grow, and that is important as this technology was developed in the UK. The UK also remains Europe’s largest ICT market with sales of £171 billion per annum with over £20 billion in equipment sales.

Hyde touched upon the SemiConclave workshop organized by the Science and Invvovation Network within the Deputy High Commission team and the ISA in October 2008. One of the outcomes of the event has been that the Bangalore based Center for Emerging Technologies at the Jain University is now working with the Scottish Microelectronics Center on a research project to fabricate MEMS devices.

He added that the ISA is helping UKTI drive its Global Value Chain program. “Our goal is now to encourage and develop more direct business to business interaction. A good example of this is the agreement signed in December between Lord Mandelson and Azim Premji of Wipro, which aims to promote UK/Indian joint work to develop new and innovative low carbon technologies.

“We are looking forward to the next stage of development of this important relationship, in particular, the promotion of the UK Core Initiative Group. We aim to have increasing representation from each other’s industries at each other’s events, including the ISA session on Innovation Ecosystems. And we want increasing number of companies working together and develop partnerships.”

He concluded that this indeed is an exciting area and an exciting time for the semiconductor industry. Delegates at ISA Vision Summit 2010 can look forward to meeting leading UK companies, such as the TTP Group, PowerOasis, Advanced Hall Sensors and the Scottish Microelectronics Center.

ISA Vision Summit 2010: Saankhya Labs, Cosmic Circuits are Indian start-ups to watch at Technovation 2010!

It was an evening to celebrate in Bangalore for home grown Indian technology and product companies, as well as Indian start-ups in semiconductor product development at the India Semiconductor Association’s (ISA) Vision Summit 2010. This year’s ISA Technovation Awards 2010 celebrated some of the best Indian start-ups to watch, as well as some of the best products developed by home-grown Indian companies.

‘Technovation 2010 – Celebrating Excellence in Electronics’ were constituted with an aim to recognize role models and excellence in not just the semiconductor, but also the greater electronics ecosystem – covering the entire electronics value chain.

Technovation 2010 acknowledged, recognised and honoured India’s best individual contributors and companies and provide them with a platform to showcase their achievements and product successes.

While Saankhya Labs, Cosmic Circuits emerged as the Indian start-ups to watch at Technovation 2010, Dr. Kumar N Sivarajan, Co-founder and CTO, Tejas Networks, was declared the ISA UKTI TechnoVisionary for 2010 for his vast contribution vastly to the design, architecture and development of a slew of next-gen SDH SONET and carrier Ethernet products.

Here are the winners. In case you wish to contact any one from this list, do get in touch with the ISA or with me.

Dr. Shanti Pavan, IIT-Madras: Winner, ISA TechnoMentor Award 2010.

ISA TechnoMentor Award 2010: Dr. Shanti Pavan – Indian Institute of Technology, Madras
He is a professor in the field of analog/mixed signal design. Dr. Shanti Pavan has done his MS & Ph.D from Columbia University, New York, USA. He is a well known authority and has mentored several students in the field of analog/mixed signal design.

ISA TechnoMentor Award 2010: Dr. Sreeram Vasanthi – Websol Energy System Ltd
She is the Director – Technical & Marketing. Mrs. Vasanthi is a alumnus of IIT Bombay and IIT Delhi, and has 15 years of experience in photovoltaic industry. She has been a role-model and an inspiration for many within her organization. Through her mentoring and leadership, she led her organization to significantly improve the efficiency of the solar cells produced by her company.

ISA UKTI TechnoVisionary Award 2010: Dr. Kumar N Sivarajan, Co-founder and CTO, Tejas Networks
In the area of optical networking, over the last nine years Kumar has contributed vastly to the design, architecture and development of a slew of Next-Gen SDH SONET and Carrier Ethernet products that allow telecom carriers to integrate voice, data and intelligent network management on a single network. Kumar was instrumental in Tejas being one of the first companies in the world to have developed and deployed standards compliant Carrier Ethernet-over-SDH SONET.

ISA Start-up to Watch — Winner: Saankhya Labs
Saankhya Labs is a fabless semiconductor startup based in Bangalore. Saankhya has developed world’s first Multi-standard TV demodulation technology targeted for Digital TV and PC TV Tuner applications. Saankhya’s unique product enables for the first time a truly universal TV demodulator, capable of demodulating all digital and analog TV signals on a single chip.

ISA Start-up to Watch — Honourable Mention: Cosmic Circuits
Cosmic Circuits is a leading provider of differentiated Analog and Mixed-Signal silicon IP for integration on to System-on-Chips. With a single-minded focus on Analog, and a large team of expert analog designers, Cosmic Circuits offers quality analog Hard-IP solutions for integration into nanometer silicon process nodes. The company has seen a growth rate of 40 percent to 45 percent for the past few years and despite the economic slowdown of last year it had positive growth.

Now, let’s have a look at the innovative products that ruled at Technovation 2010!

TSMC leads 2009 foundry rankings; GlobalFoundries top challenger!

The leading IC foundries of 2009. Source: IC Insights

Recently, IC Insights released the rankings for the world’s top pure-play and IDM foundries. No surprises, as TSMC continues to lead! The surprise entrant is of course GlobalFoundries, which ranked fourth, after having started operations in March 2009.

However, all of the foundries, barring Tower Semiconductor, registered negative growth during 2009. Tower, which acquired Jazz Semiconductor in 2008, was the only foundry to post positive growth during 2009.

IC Insights further stated that if the revenues of Chartered Semiconductors, which was purchased by GlobalFoundries recently, were combined with GlobalFoundries, their combined sales would have amounted to over $2.6 billion in 2009. That’s not very far from UMC, which is ranked no. 2!

Now, I am not an expert to comment on which foundry has done really well, despite the recession, or whether GlobalFoundries can really challenge and overtake TSMC in the future. However, I followed with great interest a discussion on one of my groups on LinkedIIn on this topic.

Daniel Nenni, a critically acclaimed blogger, and an industry colleague, had recently blogged on this subject. There were some interesting comments following that post. I sought the permission of Malcolm Penn, chairman and CEO, Future Horizons, to use some of his remarks for my blog post.

Penn said that there is a reason why TSMC is the no. 1 foundry in the world. However, as competition breeds innovation, hence, the foundry business will be much more interesting to watch with GlobalFoundries challenging TSMC.

He added: “There was also no reason why Intel is #1 in PC MPUs or Microsoft #1 in PC OS except for one key factor. Once a competitor gets to be a certain size, no amount of innovation will help swing the balance of power.” The real question therefore is: “Has TSMC now passed this tipping point?” I fear it already has.”

Fact of the matter is in the foundry business capacity is king and TSMC already outguns all of the other competitors combined. Given the minimum two to three year lead time to build and ramp new capacity, TSMC has incredibly clear visibility to see any competitive threat coming.

Very interesting! Some other observations later!