Indian semicon market update shows 28.3 percent growth in 2010!

May 4, 2011

I am a bit amused to read the latest key findings on the Indian semiconductor market from ISA-Frost & Sullivan. Never mind!

Source: ISA-Frost

Source: ISA-Frost

The report concludes that products demonstrating potential for explosive growth include –mobile devices, telecom base stations, LCD TV, STB, EMS, CFL, LED lights and smart cards and products with low MI – notebooks, tablets, STBs routers, digital cameras, etc. need to be given preferential treatment for indigenous manufacturing.

India is becoming the hub for small car manufacturing. Incentives and encouragement need to be provided for enhancing automotive component manufacturing in the country to keep pace with automobile industry growth.

Products enabling energy efficiency need to be incentivized through tax breaks for R&D and product development thereby promoting indigenous manufacturing. Electronics and semiconductor MI stagnate at 50 percent;  the TAM growth is unlikely to match the TM growth in the near future! Continuing status quo — the electronics import bill to surpass crude import bill by 2020-21.

The need of the hour is a focused mission for local electronics manufacturing promotion. A National Electronics Development Plan is also required. As is required an electronics policy for ecosystem development; subsidies for manufacturing; funds for R&D; extended tax breaks; hardware development parks.

Otherwise, the report suggests that India’s semiconductor market grew by a phenomenal 28.3 percent in 2010.

Indian semiconductor market: Source: ISA-Frost

Indian semicon market: Source: ISA-Frost

The global semiconductor market’s cyclical trends has minimal impact on India. Mobile devices, telecom and IT/ OA contributed 82 percent to semiconductor TM in 2010.

Local manufacturing of telecom equipment by OEMs and EMS companies to propel related semiconductor consumption by a massive 50 percent during 2010 to 2012. Influenced by regulatory norms and sharpening competition, automotive segment to account for the highest growth in semiconductor demand at 31 percent from 2010 to 2012.

Sustained gulf between the semiconductor TM and TAM from 2010-2012 highlight the urgency to promote local manufacturing to drive higher growth in TAM.

The Total Semiconductor Market (TM) revenues are poised to grow from $6.55 billion in 2010to $9.86 billion in 2012. The market is expected to witness a CAGR of 22.7 percent.

During the corresponding period, the Total Semiconductor Available Market (TAM) revenues are expected to grow at a CAGR of 22.3 percent reaching revenues of $4.71 billion in 2012from $3.14 billion in 2010. Mobile devices and telecom are the key contributors to TAM while mobile devices and IT/ OA are the key contributors to TM.

Being an indispensable component in a wide range of products, the memory market leads the contribution to semiconductor revenues with 23.4 percent and 20.1 percent of TM and TAM, respectively.

One hopes that all of this is indeed correct, and the Indian semiconductor industry continues to grow in future!

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  1. Sanjeev Kumar Sharma
    May 4, 2011 at 5:23 pm

    Hi Pradeep,

    Thanks for sharing F&S data. 28.3 percent is bit surprising for me. But this looks primarily driven by telecom growth. Otherwise, other sectors have still to do more. Again, due to 3G adoption, telecom sector has seen growth.

    One hopes that all of this is indeed correct, and the Indian semiconductor industry continues to grow in future!

    I am affraid that semiconductor market may not be able to continue this growth rate in coming years. Mainly due to poor show by automative industry (sales are also declining) and sluggish mobile device segment due to immense competition from china.

    Recent hikes in interest rates will have lot of pressure on the bottom line of all sectors as cost of capital is bound to go up.

    Best regards,
    Sanjeev

    • May 4, 2011 at 5:28 pm

      Yes, Sanjeev! I agree that the Indian semicon market will find it difficult to pursue such growth rates. Besides, I believe that figures from MNCs are also part of this study (though, I could be wrong!). ;) Cheers!

  2. Sambit Sengupta
    May 15, 2011 at 3:51 pm

    I wonder if these figures really matter to the larger set of people. The larger set is not concerned that Indian semiconductor industry is surviving without any government assistance or interest at all. There are numerours product development companies- who need to be recognised and given excellent support. The tax pyers money needs to be plouged into such companies- the manufacturing of the electronic designs done in India happens elsewhere and hence, the TM will always outgrow the TAM. TAM growth figure is the real figure (minus the mobile/3G growth).

    From being a low end market, which designs and makes in large scale- 2W, UPS, POS machines, printers, weighing scale machines, energy meters– we have to make high end world class equipments. Otehrwise- our beloved semicon industry will be same as our coal + steel industry of 70s-80s. We used to mine coal and sell it to Japan, and import back high end steel. We have to put our minds together and do something to get Indian designs getting to a product form and then sell to whole world at a premium. Our designs are worth it.

  3. May 15, 2011 at 4:50 pm

    Quite correct, Sambit. These numbers do not matter to the Indian semiconductor industry — they are not even part of this exercise, it seems! ;) Cheers!

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