There have been a variety of announcements made by the Government of India in the last one year or so. In the pre-90s period, the country showed just 1 percent GDP growth rate. It was adverse to FDI and had a regulated market. All of this led to deregulation under the late PM, PV Narasimha Rao.
The Indian government was averse to foreign investment, which was opened up around 1994. Since then, we have seen 6-8 percent growth, said Vinay Shenoy, MD, Infineon Technologies (India). He was delivering the keynote at the UVM 1.2 day, being held in Bangalore, India.
Around 1997, India signed the ITA-1 with the WTO. Lot of electronic items had their import duty reduced to zero. It effectively destroyed the electronics manufacturing industry in India. We were now reduced to being a user of screwdriver technology. In 1985, the National Computer Policy, and in 1986, the National Software Policy, were drafted. The government of India believed that there existed some opportunities. The STPI was also created, as well as 100 percent EoUs. So far, we have been very successful in services, but have a huge deficit on manufacturing.
We made an attempt to kick off semicon manufacturing in 2007, but that didn’t take off for several reasons. It was later revived in 2011-12. Under the latest national policy of electronics, there have been a couple announcements – one, setting up of two semicon fabs in India. The capital grant – nearly 25-27 percent — is being given by the government. It has provided a financial incentive – of about $2 billion.
Two, electronics manufacturing per se, unless it is completely an EoU, the semicon industry will find it difficult to survive. There is the M-SIPS package that offers 25 percent capital grant to a wide range of industries.
Three, we have granted some incentives for manufacturing. But, how are you going to sell? The government has also proposed ‘Made in India’, where, 30 percent of the products will be used within India. These will largely be in the government procurements, so that the BoM should be at least 30 percent from India. The preferential market policy applies to all segments, except defense.
Skill development is also key. The government has clearly stated that there should be innovation-led manufacturing. The government also wants to develop PhDs in selected domains. It intends to provide better lab facilities, better professors, etc. Also, young professors seeking to expand, can seek funding from the government.
TSMC promotes small IP companies. Similarly, it should be done in India. For semicon, these two fabs in India will likely come up in two-three years time. “Look at how you can partner with these fabs. Your interest in the semicon industry will be highly critical. The concern of the industry has been the stability of the tax regime. The government of India has assured 10 years of stable tax regime. The returns will come in 10-15 years,” added Shenoy.
The government has set up electronics manufacturing clusters (EMC). These will make it easy for helping companies to set up within the EMC. The NSDC is tying up with universities in bringing skill-sets. The industry is also defining what skills will be required. The government is funding PhDs, to pursue specialization.
If I correctly remember, sometime in Oct. 2008, S. Janakiraman, then chairman of the India Semiconductor Association, had proclaimed that despite not having fabs, the ‘fabless India” had been shining brightly! Later, in August 2011, I had written an article on whether India was keen on going the fabless way! Today, at the IESA Vision Summit in Bangalore, Dr, Wally Rhines repeated nearly the same lines!
While the number of new fabless startups has declined substantially in the West during the past decade, they are growing in India, said Dr. Walden C. Rhines, chairman and CEO, during his presentation “Next Steps for the Indian Semiconductor Industry” at the ongoing IESA Vision Summit 2014.
India has key capabilities to stimulate growth of semiconductor companies, which include design services companies, design engineering expertise and innovation, returning entrepreneurs, and educational system. Direct interaction with equipment/systems companies will complete the product development process.
Off the top 50 semicon companies in 2012, 13 are fabless and four are foundries. The global fabless IC market is likely to grow 29 percent in 2013. The fabless IC revenue also continues to grow, reaching about $78.1 billion in 2013. The fabless revenue is highly concentrated with the top 10 companies likely to account for 64 percent revenue in 2013. As of 2012, the GSA estimates that there aere 1,011 fabless companies.
The semiconductor IP (SIP) market has also been growing and is likely to reach $4,774 million by 2020, growing at a CAGR of 10 percent. The top 10 SIP companies account for 87 percent of the global revenue. Tape-outs at advanced nodes have been growing. However, there are still large large opportunities in older technologies.
IoT will transform industry
It is expected that the Internet of Things (IoT) will transform the semiconductor industry. It is said that in the next 10 years, as many as 100 billion objects could be tied together to form a “central nervous system” for the planet and support highly intelligent web-based systems. As of 2013, 1 trillion devices are connected to the network.
Product differentiation alone makes switching analog/mixed-signal suppliers difficult. Change in strategy toward differentiation gradually raises GPM percentage.
India’s evolving importance to future of fabless
Now, India ranks among the top five semiconductor design locations worldwide. US leads with 507, China with 472, Taiwan with 256, Israel with 150, and India with 120. Some prominent Indian companies are Ineda, Saankhya Labs, Orca Systems and Signal Chip (all fabless) and DXCorr and SilabTech (all SIP).
India is already a leading source of SIP, accounting for 5.3 percent, globally, after USA 43 percent and China 17.3 percent, respectively. It now seems that India has been evolving from design services to fabless powerhouse. India has built a foundation for a fabless future. It now has worldwide leadership with the most influential design teams in the world.
Presently, there are 1,031 MNC R&D centers in India. Next, 18 of the top 20 US semiconductor companies have design centers in India. And, 20 European corporations set up engineering R&D centers in India last year. India also has the richest pool of creative engineering resources and educational institutions in the world. The experience level of Indian engineers has been increasing, but it is still a young and creative workforce. There is also a growing pool of angel investors in India, and also in the West, with strong connections to India.
So, what are the key ingredients to generate a thriving infrastructure? It is involvement and expertise with end equipment. Superb product definition requires the elimination of functional barriers. He gave some examples of foreign “flagged” Indian companies that produced early successes. When users and tool developers work in close proximity, “out-of-the-Box” architectural innovations revolutionize design verification.
The IESA 2014 Vision Summit opened today in Bangalore, with the one key question: what does India need to do to boost electronics manufacturing? Here are some words of wisdom from some industry icons.
SR Patil, Minister for IT-BT, Science and Technology, Karnataka, remarked that at present, we are not able to find any significant place in global hardware arena. We are heavily dependent on other countries to import electronic goods – that may be computers, chips, mobile phones and the list goes on.
“If I am right, our import bill of electronic goods has surpassed $30 billion previous year. It is calculated to be $42 billion by next year if we don’t initiate sincere measures to boost the domestic manufacturing. I don’t have any hesitation to say that we must learn lessons from small countries such as South Korea, Taiwan and Israel on this count.”
The main objective of the Karnataka ESDM policy is to make the state a preferred destination for ESDM investment, and emerge as the ESDM leader in the country.
Patil said: “We aim to generate around 2.4 lakh jobs and 20 percent of the country’s total ESDM export target of $80 billion by the year 2020. We are preparing a ground for setting up of ESDM clusters – both that of Brownfield and Greenfield.”
As many eight ESDM companies have registered with the IT-BT Department recently and obviously they are entitled for various incentives and concessions under the new policy.
Dr. Om Nalamasu, senior VP and CTO, Applied Materials Inc. added that establishing a high-value manufacturing industry as semiconductor chip fabrication will have transformative effect on the overall electronics industry in India.
This will have a very strong multiplier effect that will result in major strides forward in the value generated from all sectors within the semiconductor ecosystem – one of the biggest being the growth of high-tech and high value-add employment opportunities this will generate in the country. The historic significance of this approval will be felt for many years to come. Manufacturing in India will soon witness a new frontier.
A strong manufacturing base is critical for high-growth economies. There are successful examples in South East Asia where advanced manufacturing has resulted in strong GDP multipliers. In India, there’s a strong electronics market opportunity, driven by telecom, IT, consumer and industrial electronics; 65 percent of these electronic products are imported today. The disposable income of the growing middle class in India and China will continue to drive electronics market growth.
The point is: all of these words have been spoken over and over again! The first semicon policy was announced in 2007-08, followed by a revised policy in 2010-11. In between, the first Karnataka semicon policy was announced. However, there have been very, very few, or no takers! Even the first semicon fab policy announcement went unaccounted for! Later, last year, there was another announcement regarding two fabs that are said to be coming up!
When will India deliver? One hopes that happens soon!
Finally, the Government of India has approved the establishment of a semiconductor wafer fab (fab) in India!
This is indeed heart warming news, especially for the Indian semiconductor and electronics industries. For years, India has been trying to get at least one fab up and running! Now, the dream is about to be realized!
Speaking from China, an ecstatic BV Naidu, chairman and managing director, Sagitaur Ventures, co-chairman, Karnataka ICT Grioup and former president, India Semiconductor Association (ISA) said: “This is really a fantastic news for the Indian semiconductor industry. The government has been trying to achieve this since 2008. The announcement goes as a strong signal to global community.”
Pradip Dutta, corporate VP and MD, Synopsys, said: “It is a momentous decision for the semiconductor industry and by extension the electronics industry for our country. It should lead to a level playing field for the local manufacturers and mitigate some of the disability factors. I sincerely hope the industry reacts positively to this news and this leads to a vibrant local IC design industry.”
Raghu Panicker, sales director, Mentor Graphics India, added: “For years, India has been trying to get at least one fab up and running! This has indeed been a long awaited news. Finally its not ONE, but TWO. The fabs would fuel the growth of semicon start up’s and electronics industry as a whole. It is a big step forward for the overall ESDM inititaive by IESA and government.”
Jaypee Group, IBM and Tower form one consortium. HSMC, STMicroelectronics and a Malaysian company are said to be part of the other consortium.
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! ;)
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.
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.
“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!
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