Union budget 2013-14: Is there some hope for semiconductors?

Here are highlights of the Union budget 2013-14 presented by P. Chidambaram, union Finance minister, Government of India. Also, is there finally, some hope for the Indian semiconductor industry?

Highlights

* Doing business with India should be easy, friendly and helpful.
* Foreign investments must be encouraged.
* Accelerating growth is the main goal.
* Need to encourage FDI in consonance with economic priorities.
* To target $1 trillion in infrastructure in the 12th plan.
* There are incentives for semiconductor wafer fab manufacturing.
* There will be appropriate incentives for the semiconductors industry, including zero customs duty on plants and machineries.
* To increase allocation for science and atomic departments.
* Indian Institute of BioTechnology to be set up at Ranchi.
* Non-conventional wind energy sector needs help.
* Will encourage cities to take up waste-energy projects through PPPs.
* Plan being developed for Chennai-Bangalore industrial corridor.
* Preparatory work started for Bengalooru-Mumbai Industrial Corridor.
* To launch two new industrial cities in Gujarat and Maharashtra.
* Propose to continue with the Technology Upgradation funds scheme for the textile sector.
* India’s first women’s public sector bank to be set up.
* Woman’s bank license to be in place by October, 2013.
* All PSU banks branches to have ATMs by March, 2014.
* Zero customs duty for electrical plants and machinery proposed.
* Higher customs duty on set-top boxes.
* To provide more than Rs 4200 crore for medical studies.
* To allocate Rs 1106 crore for alternative medicine industry.
* To allocate 100 crores to AMU, BHU, TISS-Guwahati and INTACH.
* Government to set up National Institute of Sports Coaches in Patiala.
* To expand private FM radio to 294 cities.
* To auction 839 licenses for FM network to cover all India.
* Government to construct power transmission system from Srinagar to Leh at the cost of Rs 1,840 crore, Rs 226 crore provided in current budget.
* Mobile phones priced more than Rs. 2,000 will see duty raised by 6 percent.
* Extend tax benefit to electrical vehicles.
* A company investing Rs 100 crore or more in plant and machinery in April 1, 2013 to March 31, 2015 will be allowed 15 percent investment deduction allowance apart from depreciation.
* SEBI to simplify KYC norms governing foreign investors.
* SEBI will simplify procedures for entry of foreign portfolio investors to invest in India.
* Higher outlay on waste management.
* Government to monitor cost of doing business in India.
* Zero customs duty proposed for electrical plants and machinery.
* Proposal to provide Rs. 800 crore for the Ministry of New & Renewable Energy for generation-based incentive for wind energy projects as the non-conventional wind energy sector deserves incentives.
* Government will provide low interest bearing funds from the National Clean Energy Fund (NCEF) to IREDA to on-lend to viable renewable energy projects. The scheme will have a life span of five years.
* Proposal to set apart Rs. 2,000 crore and asked the National Innovation Council to formulate a scheme for the management and application of the fund.

Coming to semiconductors, the world today is discussing the viability of 450mm fabs. I am well aware that Malcolm Penn has been pushing for 450mm fabs across Europe. I believe that one such fab will cost in the excess of $25 billion, if not more. So, who will invest that kind of money in India? Do we have clean water and 24-hour electricity supply in any state that’s required for such a fab? What will this so-called 450mm fab manufacture? Does the fab have a blueprint in place? Well, have we even addressed any of these questions?

What should India do to boost semiconductors?

I’ve already written a lot on the Indian semiconductor industry. Now, there’s nothing new to say. Even then, I am literally coaxed to say what I think the Indian semiconductor industry should do! As though the industry will listen to a nobody like me! 

First, the industry should stop wasting time running here and there, and focus on getting the job done! Semiconductors isn’t a new area, and has been in existence even before the India Semiconductor Association (ISA) came into being in 2005.

There have been talks (ongoing since about 2006) about building fabs in India. Well, where are they? Back in 2010, I wrote a post titled Indian industry proposes to extend deadline of India’s semicon policy up to March 2015! One sincerely hopes that has actually happened!

India could consider building 150/180/200mm fabs that tackle local problems via indigenous applications. And, there are scores of local issues that need to be dealt with! I’ve said before, and am repeating myself at the sake of repetition — the semiconductor industry is NOT the IT industry, but it appears to being treated like one, especially in India!

Indian companies could consider developing firms in the assembly testing, verification and packaging (ATMP) space. Very little has happened so far and a lot more needs to be done. There could be some attempts to attract and invite companies in areas such as RFID to address local problems and develop local applications, unless India has given up on RFIDs.

I really have very little idea whether there is any interest in India to pursue global companies in PDP, OLED/LED space for setting up manufacturing units. Although, I can safely bet that if it is the Chinese companies that Indian firms are setting themselves up to take on, we would have a very long way to go!

India also needs to kindly forget about the ‘states race’! It has not helped anyone so far, nor will it help anyone in future!! In the end, we are all looking to develop India, aren’t we?

I didn’t even know that there is so much time required for setting up a pan-industry panel that will determine the top five products that are important for India! Seriously!! Anyone, who resides in India, should be able to tell you that the key sectors in India are automotive, consumer, industrial, medical and telecom. Agree that automotive and certain medical electronics areas can be expensive. Well, there are still three areas to pursue!

If anyone had simply bothered to send me an email or even call me, I’d have very happily told them about the top five product lines that are important for India and much more!   There is a pressing need to develop a robust Indian semiconductor industry, led by local companies! Many would agree that all of this seems very easy to say, but difficult to manage! 

Indian ESDM industry likely to grow 9.9 percent CAGR in 2011-15

The India Semiconductor Association (ISA), along with Frost and Sullivan, released the 6th ISA-F&S Report on the India ESDM Market (2011-2015). Evidently, the focus is on electronics and semiconductors industries in India.

Only a few economies have exhibited the strength to weather the harsh conditions prevailing in the global environment. Such economies are especially remarkable since they are vulnerable to headwinds given the significant size of their GDP. India, despite its temporary slowdown in the last year, has not only withstood the adverse environment, but has also been witnessing green shoots of recovery.

The Electronics Systems Design and Manufacturing (ESDM) sector ranks high among the various segments that have contributed to creating this bulwark. The ESDM industry in India has continued to chart its journey northwards. While the industry may not have achieved the exponential growth forecast by experts, its performance in the last few years can be termed an achievement in view of the overall slowdown of the Indian economy.

Source: ISA, India.

The ESDM industry is expected to grow at a CAGR of 9.9 percent between 2011 and 2015 resulting in an industry size of $94.2 billion by 2015. Although the electronics product market is growing a very fast pace, ironically most of the demand is being fulfilled by imports. The growth potential of the services component will be determined to a great extent by India’s ability to undertake higher value-add activities and cost competiveness.

Resolute focus on the ESDM industry and favorable policies to incentivize investment, adoption of new technologies, catalyzing innovation and entrepreneurship, enhancement of skills and addressing the disability cost of developing ESDM products domestically are the key ingredients to elevating India to a leading player in the global arena.

Key drivers and challenges for Indian ESDM industry
The positive factors far outweigh the challenges that impact the Indian ESDM industry. The growth of the product markets is one of the key drivers where mobile devices, consumer electronics and IT/OA products continue to script some of the high growth rates globally.

Financial inclusion programs and rising standards of living have generated demand for new products besides increasing customer-base of existing ones. India is also recognized globally as a key source of high technology skills which are leveraged by global corporations for generating value.

The global economic downturn has had a profound impact on the ESDM industry in the past quarters. This is expected to be temporary, and given the strong domestic growth potential, is expected to be overcome over the next two quarters. Our continuing reliance on imports is impeding growth of domestic manufacturing, which in turn is a major hurdle to the creation of a viable domestic ecosystem. The high cost of developing products including duties, taxation, capital and infrastructure are leading to a slow pace of investment in this sector.

In a developing economy like India, where the government is driving force through its role of policy maker and facilitator, new and evolving policies for ESDM are anticipated to spur the industry into a higher growth mode. The recognition of the ESDM industry as a key contributor to the GDP is a major step forward. The national policies on telecom and electronics have the potential to bring about a major change in the domestic industry. Quick implementation of these policy initiatives will positively impact the development of the domestic product design and manufacturing industry.

The ESDM industry in India comprises of the following four key segments:

1. Electronic Products.
2. Electronic Components.
3. Semiconductor Design Services.
4. Electronics Manufacturing Services (EMS).

The first two represents products, while the others highlight the manufacturing services and design services.

Analog Devices launches portable lab for electronic circuit design

Analog Devices, as part of its University Program, has launched a personal, affordable and portable lab for electronic circuit design in India at the 26th international conference on VLSI, currently ongoing in Pune, India.

Somshubhro Pal Choudhury, MD, Analog Devices India Pvt Ltd said that miniaturization and portability are the key trends today. Desktops have given way to laptops, and then to smartphones and tablets. The expensive vital signs monitoring equipment in hospitals is giving way to more wearable miniaturized power sipping (and not guzzling) medical gadgets. It is natural that education and training for engineering students start taking a similar route.

What is this personal lab?
What it means that the lab will fit in the palm of your hand and would enable students to learn analog and mixed signal design, anywhere and everywhere not limited by their expensive university/college lab setup where access is fairly limited and the amount of time is limited as well to a few hours every week.

Analog Devices’ portable lab.

What does it mean for students?
With the lab, now, the students can carry on their experiments in their hostels/dorms and in their classrooms, using this portable lab, run experiments quickly during the class to see how real time real-life how a certain change in circuit impacts the results.

It has all the elements of a complete and expensive Lab setup on this portable kit connected with the student’s laptop. Students would not need equipment like oscilloscopes, waveform generators, logic analyzers and power supplies, expensive equipment that only top universities can afford.

Along with the portable kit, online and downloadable software and teaching materials, circuit simulation tools, online support and community, online textbook, reference designs and lab projects to design to enhance learning as a supplement to their core engineering curriculum are also provided free of charge.

This launch is likely to revolutionize electronic circuit design education and learning among the engineering academic community.

Ph.D candidates in VLSI industry! Is enough being done?

“Fine art is that in which the hand, the head, and the heart of man go together.” – John Ruskin.

“Great men’s honor ought always to be measured by the methods they made use of in attaining it.” – François Duc De La Rochefoucauld.

The 26th International Conference on VLSI Design 2013 is starting tomorrow at Hyatt Regency, Pune. Over the years, it has served as a forum for VLSI folks to discuss topics related to VLSI design, EDA, embedded systems, etc. The theme for the VLSI and embedded systems conference is green technology.

That brings me to a point raised by one reader of this blog- what’s the future of  Ph.D candidates in the VLSI industry! First, do not believe when you are told that you can only join academics in case you are a Ph.D. You can certainly switch over to R&D at the various VLSI companies! Or, you can start on your own, by developing something noteworthy!!

As for the current scenario, especially in India, students, or well, Ph.D holders should seriously consider developing useful projects for  use in India, and globally. It seems all too very easy for folks to join some large MNC in India or overseas, as according to such people: their jobs are done!

For some strange reason, semiconductor/VLSI development seems to have remained in the backburner in India! I was surprised on visiting a center in Bangalore to find students – actually, some Ph.D. holders – working on projects that may never even see the light of the day! That leads to the question: are the tutors guiding them enough? Do we even have systems in place that backs development?

Having spent a long time in the Far East, I have seen young Chinese and Taiwanese, Korean and Japanese men and women take to VLSI earnestly. How did they manage to do that? Mainly, by starting their own companies and developing some product!

Now, this is something not yet evident in India! Has anyone else asked this question? And, can the Indian VLSI community make this happen? It should not be very difficult, if the head, hand and heart are there in the deed!

As John Ruskin says, “Fine art is that in which the hand, the head, and the heart of man go together.”

François Duc De La Rochefoucauld. says, “Great men’s honor ought always to be measured by the methods they made use of in attaining it.”

Hope these words make sense! Developing and designing solutions is a fine art where the hand, the head and the heart must be in sync. And, if you have really developed a solution or a product, what were the methods you used to attain that! Answering these two questions are tough, but the answers really lie within us!

My question remains: do students (in India) really spend time for developing projects, or do they simply copy or buy projects?

Coming back to the VLSI conference, this year’s program will play host to the 4th IEEE International Workshop on Reliability Aware System Design and Test (RASDAT) as well. There will be discussions around topics such as design-for-test, fault-tolerant micro architecture, low power test, reliability of CMOS circuits, design for reliability, dependability and verifiability, etc.

A semiconductor company will likely be introducing a portable and affordable analog design kit. Students will no longer be required to go to expensive labs for developing projects. There should be lot of simulation tools, online course materials, community support, lab materials, etc. to use using the analog design kit. There should be a string of announcements too, so let’s wait for the event to start!

Yet another electronics policy for India?

India has once again announced an Electronics Policy, and frankly, I’ve lost count, how many times! Nevertheless, one hopes that this policy somehow takes off, and helps India get off the ground!  There are certain points in the policy that are worth a relook.

One, the setting up of electronic manufacturing clusters. This has been time and again stressed and re-stressed. Will it come around, this time? Let’s wait and watch, if it happens this time!

Two, as per the policy, there is a proposal for setting up two semiconductor wafer manufacturing fabrication facilities. Where? As far as one knows, there is hardly any infrastructure around to support even one semicon fab! Some people may say, Bangalore, but well, they are welcome to say that! As for people buying more of ‘domestically manufactured electronic goods’, it remains to be seen!

Three, back in 2007, when the SIPS program was announced, there were great expectations! If you recall some time ago, I mentioned that the Indian semiconductor policy, announced back in 2007, had supposedly expired on March 31, 2010! Then, the Indian industry came up with recommendations that included extending the Indian semicon policy up to March 2015! So, what happens to that? Or, is it dead and buried?

Four, back in 2007, the ‘ecosystem units’ were clearly defined as units, other than a fab unit, for manufacture of semiconductors, displays including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; solar cells; photovoltaics; other advanced micro and nanotechnology products; and assembly and test of all the above products. What’s happening now?

Five, does all of this mean that the role of India-based semiconductor companies as a percentage of the semiconductor market globally, will improve? Or, do we take India as a system/gadget maker and thus, as a percentage of that market??

Six, fabrication is increasingly expensive, much involved and the actual global fabrication players are declining and will be about three to four companies. There is talk of 450mm fabs across the world! Have we even heard a word from India?

Okay, so let’s say, India will have two fabs? By when? What process technology? If it is a 450mm fab, India can very well kiss goodbye to this decade, at least. And, India continues to slip back in having a ((proper) fab!

Can being fabless and M-SIPS take India to top?

The other day, I was engaged in an interesting discussion regarding the Indian semiconductor industry. The obvious question: can fabless semiconductor take India to the top?

Well, it all depends on the definition of ‘top’! Does it mean the role of India-based semiconductor companies as a percentage of the semiconductor market globally? Or, do we take India as a system/gadget maker and thus, as a percentage of that market??

Fabrication is increasingly expensive, much involved and the actual global fabrication players (i.e. those who (also) own a fabrication plant) are declining and will be about three to four companies, and about 10, if we include all off those Chinese fabs.

And, India continues to slip back in having a ((proper) fab!

Now, India’s contributions to global electronics and semiconductors will continue to increase as the MNC subsidiary companies’ hub, and not quite as India-based companies, who are coming out with something that will shake the world in terms of that chip(s)!

If India has domestically consuming gadgets, that are more India specific, that could need devices available less outside. For that purpose alone, a local fab could be essential. However, such requirements appear less each day!

So, yes! Fabless semiconductor could be the way forward for India, in terms of contribution to its economy. However, in terms of India becoming a global player through such chips conceptualized in India, for India and the world, the chance is lesser, for now!

Well, hasn’t the Indian semiconductor industry been shouting ‘fabless’ from the rooftops for some years now? Let us see how India has progressed so far!

One, in terms of having local fab, the answer is NO! Two, in terms of increasing its percentage of contribution to global semiconductors, electronics from India, YES, an increasing role and value (though these are embedded software too).

In terms of having India-based companies working toward developing chips, YES again, in terms of smaller, analog, components that are crucial (like Cosmic Circuits), and YES, in terms of having IP-based companies (like Innovative Logic India for USB3.0) and, YES in terms of increasing service companies.

Many more companies are coming up, and some started directly here in India, such as Apsconnect, Techvulcan, etc. In terms of the actual solutions, YES again, as we have developed solutions in medical, automation, etc.

However, the answer to the question remains NO in terms of having chips come out of India, as yet!

Now, what happens to the fab-lite strategy? Well, it continues, globally. From an India perspective, it is actually in a way, validation of the earlier belief. There is less direct importance to manufacturing from themselves, but more about the actual value add they do OR can do.

Now, given this situation, let us also look at the key growth drivers in Indian electronics, especially, since we are talking about fabless and fab-lite.

The obvious one is to develop solutions for the India market. It is likely that these can be for outside markets as well. This ability will actually make India develop solutions for global markets. Also, these are not semiconductors per se, but, (embedded) solutions based on them.

The above situation can slowly lead to a fabrication and manufacturing ecosystem in India. India should also try to position itself at the higher end of the solutions, markets, services, etc., so that its value contribution can be much more.

Friends, is there a way out of the current situation that India finds itself?

Actually, this is normal process of growth in the chosen path. India continues to think about low end, less (or no) risk options of services. There is only so much growth, revenue, profit possible in those areas unless one goes up the market.

India has not done that as it could be, as an ecosystem in all. India should focus on its own internal requirements. That could mean growth and an increasing role for India, globally, as well!

Besides manufacturing, the big issue lies in marketing of such products. A senior statesman from a leading Indian electronics firm once asked me, “How will India compete in marketing of these products compared to the Chinese or Taiwanese manufacturers, who have more than 30 years of experience in these industries?”

How one wishes that India had at least two wafer fabs by now, what with the technology nodes constantly upping their ante. Even if someone does decide to put up a fab, it will be extremely expensive and has to be cutting-edge. However, as I said, one should never give up hope!

And then, there is the Modified Special Incentive Package Scheme (M-SIPS).

The newly announced M-SIPS is long awaited and much needed. The key is to now turn this ‘gazette notification’ into implementation, by the regulators, and utilisation by the industry.

It is understandable that the government can only do so much, particularly, under the given circumstances. With that kept in mind, this is a yet another good start! Hopefully, instead of just commenting on this policy, the industry sincerely works to benefit from it by properly utilizing it.

Why just think of digitalization of TV! The number of set-top boxes required across the country will be huge! Or, think of electrification of roads all over India. The number of LEDs required are likely to be massive. These are just two examples of the many possible. The Indian electronics industry needs to move fast, and now!

Hasn’t all of this been very easy  to say, difficult to manage!

DIT outlines initiatives to promote ESDM in India

The Department of IT, Government of India, recently organized a workshop on electronics system design and manufacturing (ESDM), conducted by the India Semiconductor Association (ISA). Dr. Ajay Kumar, joint secretary, Dept. of IT, Government of India, touched upon some major initiatives to promote ESDM. These include:

* Setting up two semiconductor wafer fabs for manufacture of chips.
* Introducing Modified Special Incentive Package Scheme to encourage manufacture of high-priority electronic products in India.
* Provide incentives for setting up of electronics manufacturing clusters.
* Setting up of the National Electronics Mission (NEM).
* Providing Preferential Market Access to domestically manufactured electronics products for government procurement and procurement by government licensees.
* Setting up of “Electronic Development Fund”.

Some of the other initiatives to promote ESDM include:
* Draft National Policy for Electronics, 2011 released for public consultation on October 3, 2011. Comments invited till end October.
* Additional items  included under ESDM for benefit of Special Focus Scheme under the Foreign Trade Policy recently.
* Mandating health and safety standards for 16 major electronic items under finalization in consultation with BIS.
* Private sector participation in human resource development being promoted.
* Sector specific initiatives for set-top boxes, medical electronics, avionics, industrial electronics, automotive electronics, LEDs, strategic electronics for defense, space and nuclear.
* Awareness creation and interest generation domestically and globally.
* Renaming the Department as Department of Electronics and IT (DeitY).

The semiconductor design industry in India consists of VLSI design, board/hardware design and embedded software development. The size was estimated at $6.5 billion in 2009 and is expected to log a CAGR of 17.3 percent over the next three years to reach $10.6 billion in 2012. Nearly 2,000 chips are being designed each year and more than 20,000 engineers being engaged in various aspects of chip designing and verification.

Designing systems to thrive in disruptive trends!

Srini Rajam, CEO, Ittiam Systems presented the guest keynote at the CDNLive! 2011 in Bangalore, India, titled ‘Designing Systems to Thrive in Disruptive Trends’. According to him, key factors for design project success include scope definition, realistic targets, good estimation and right resources. Today, smart system design enables being a step ahead in the world of disruptive system demands.

The concergence decade saw an affordable convergence of media and functions. The world also moved from the PC in 2000 to the smartphone in 2010. There has also been a convergence of audio, video and communications. The SoC and system design require performance, quality and price to work in tandem.

In the imagination decade, we have come to expect electronics to do whatever we fancy. In the smart system design era, we have come to anticipate a future system that will also work perfectly today.

Today, we are in the world of IP video communication. First, everything is evolving. There have been advances in video technology, SoC and infrastructure. Technologies designed elsewhere are being brought in. There is a virtually infinite range in quality and price levels. The video communication system holds the key dynamics. The SoC, software and system have entered into a synergistic relationship.

For smart system design, there is a need to look at the big picture. Scaling down is easier than scaling up. Smart system is built to achieve efficiency in scale down. The reference platform is needed for the development roadmap.

For designing, the system may function as a module in other system. Also, critical components of the system may evolve outside. Parts of the system may also get replaced by the ecosystem. As for the SoC, there must be a roadmap enabling application software portability. There should be modular scaling with plug and play of IPs/components. Tools for hardware-software co-development must be available from the early stages.

All of this would enable you to being a step ahead in the world of disruptive system demands.

What’s happening with ISA and Indian semicon industry?

What? The India Semiconductor Association (ISA) only has around 25 Indian companies in its list? This startling piece of statistic was recently conveyed to me by a company looking to enter India! I frantically contacted ISA to clarify. As of now, am yet to get a reply.

I look around, especially across Asia. There are so many local companies listed in China, Japan, Hong Kong, South Korea and Taiwan, but the number drops drastically, when it comes to India!

Having spent a number of years in Asia Pacific and being more familiar with its ways definitely helps. Why, I remember meeting TSMC, back in 1998, in Taiwan. It was considered a small entity, with few takers. Where has it risen today?

Even Huawei, for example, showed off its 3G base stations, while still a young Chinese company, to me in 2000. I recall asking Richard Lee, then with Huawei, what’s the company’s expansion plans. Today, everyone knows how fast and wide Huawei has expanded!

Now, when you compare two of the biggest players today – TSMC and Huawei — with Indian players, who do you come up with? Nothing?? Some may say, AirTel and Reliance? Excuse me, but aren’t they telecom operators?

ISA founder members in Oct. 2004!

Now, I do know of several start-ups in the Indian semiconductor space, who have time and again given a negative response when asked the question: Are you an ISA member? The single biggest and telling response has been: “ISA caters to global companies or MNCs. What does it do or has done for the Indian companies? We are fine without its support!”

Wow! If this is the response that the Indian semiconductor start-ups have toward the industry association, I wonder what lies ahead!

When the ISA had started off in Oct. 2004, things weren’t this way! Going back to that year, India was said to have a major advantage in building fabless semiconductor companies. Some other advantages in favor of India at that time (Nov. 2004), were: local IC design service firms, who were creators of selective IP, development of smart chips with embedded software and the need for microelectronics as national agenda. Today, all of that seems to have been lost! Why? These are not even discussed?

And now, the ISA has latched on to ESDM (electronics system design and manufacturing). That’s really ‘easy to say, but difficult to manage!’ Going by the current happenings, one does not feel even this can happen! One wishes, it eventually does.

But hey, this post is not about ESDM! It is about having the number of Indian-born-and-bred semiconductor companies within the ISA!  Take a good look at the image! Only one member of the Executive Council is currently present! Where are all the founders of ISA? Or, do you now want to tell me that the Indian industry does not even respect its founding fathers?

The ISA is committed to including all players of the ESDM ecosystem within it’s member base. As such, any company which plays in this ecosystem, irrespective of their country of origin, is welcome to join the ISA. Having said that, the ISA is particularly partial to getting more companies registered within India, and who are doing both R&D and development within India, to join it’s membership base. We are also very supportive of startups in this space and are very proud of the startups who are already members, said PVG Menon, president, ISA.