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India should build chip design capability: Raymond Bingham

February 12, 2010

The India Semiconductor Association (ISA) invited me to an exclusive roundtable with Raymond Bingham, managing director, General Atlantic, a global growth equity investment firm. Having joined the firm in 2006, Bingham is co-head of General Atlantic’s Palo Alto office. He also serves as co-head of the firm’s investment activities in the Communications and Electronics sector.

He discussed a host of issues, such as India’s vision for building its chip design capability, SaaS model for startups and VC investments in semiconductors.

What can be India’s vision?
According to Bingham, India is still emerging as a chip design resource. Although a lot of good teams are in place, such as those at Texas Instruments, STMicroelectronics, for instance, those teams haven’t really come out to do their own things. The population of India based chip designers need more time.

India still retains a strong technical labor that is still reasonable. He advised India to build on the shoulder of chip design services, layer by layer, and build a strong chip designing capability. “Use a business model that works for the time being and then move up the value chain,” he advised.

On the topic of fabs, he said that having domestic consumption would assist in getting a fab or a foundry. The supply chain is currently the barrier. “You (India) have addressed a lot in the last five years. Some barriers in the supply chain are being addressed as well,” he said. “The last dominos to fall would be government barriers, regulatory barriers, etc.”

Earlier, commenting on the investments in the chip industry, he cited some figures stating that investments had been really ugly in the recent times. Besides the economic downturn, the other key reason for this dip in investment was that people simply did not want to invest in semiconductors! The increasingly large amount of money that one has to commit to a semicon start-up has scared away the marginal players. “It is an awful lot of money to invest, when exits are few. The risk reward is also very low,” he added.

Bingham also touched upon the Cadence VCAD  (virtual integrated computer aided design) services model, while on the subject of a EDA companies adopting a SaaS model for start-ups. This program helped the ecosystem grow in China, and there was expert support around it. Perhaps, such a model can work well in India.

Speaking about General Atlantic, Bingham said that the equity investment company looked to invest $1-2 billion each year. “We are organized around verticals and I am responsible for electronics. We also have verticals such as healthcare, nanoenergy, financial services, etc. Now, we are trying to be responsive to the biggest themes that are playing out,” he added.

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