It’s been a week since I’ve been mulling over these myself, especially, pondering over developments in the global semiconductor and electronics industries, as well as what could happen in India during 2009. Well, lots will happen, and I can’t wait for the new year to start!
I caught up with Rajeev Mehtani, vice president and managing director, NXP Semiconductors, India, and discussed in depth about the trends for 2009. Here’s a look at that discussion.
INDIA — ELECTRONICS & SEMICONDUCTORS
1. The DTH story will continue to increase in India with companies such as Tata Sky, DISH TV, BIG TV, etc., gaining market share. Owing to these challenges, there would be significant consolidation among the cable operators. Digitalization will also be seen in 2009.
2. The slowdown will affect growth across all sectors. Our view is that LCD TVs as well as STBs will continue to grow.
3. The year 2009 will witness e-commerce revolution and the RFID sector will grow at a 40-50 percent clip. The government has been sponsoring a lot of projects, which include RFID in the metros, e-passport cards and national ID cards. By mid-2009, we can expect a mass deployment of these projects as well as micro payments.
4. Manufacturing in India will continue to grow; EMS or OEMs, such as Samsung, Nokia, Flextronics, etc.
5. There could be a move from services to products in electronics and semiconductor spaces. The number of funded startups has grown significantly over the last years and more and more ideas are coming on the table.
6. The solar/PV sector will grow in India. High entry cost of capital for panels will be a barrier for this sector. Government enhancement is necessary. India will be different than other countries as people won’t push energy back into the grid; it will be used more for household consumption. The India grid is unstable. Tracking it requires a lot of expensive electronic switching. Solar deployment could be at the micro level, and also community level, where it makes more sense.
7. The startups in India are mostly Web 2.0 based, although there aren’t many hardware startups.
GLOBAL — ELECTRONICS & SEMICONDUCTORS
1. The semiconductor industry is truly global, That is mostly because it is a very expensive industry.
2. Things are a bit murky in the semiconductor industry. It would probably be dipping 10-15 percent next year.
3. Globally, energy management and home automation will start to take off in 2009. Satellite broadcasters will also continue to gain more strength.
4. On a worldwide scale, 3G will win. You will have 3G phones, and you’d add LTE to those. India is slightly different. Only 20 percent of Indian households are ready for broadband access. In India, WiMAX could be a way to have wireless broadband at home.
5. Industries moving to 300mm fabs will be making up only 20-25pc of the market. Not many need 45nm or 40nm chips. People will question any major capex, until there’s a big return and wait for recession to end. The bright spot is solar!
6. The fabless strategy would be the only way to go forward. While MNCs with fabless strategy are present in India, Indian startups in this space are quite few.
Just about 10 odd days ago, I had blogged about building-integrated photovoltaics (BIPV)! I had also mentioned how solar/PV will be the next big story in India, with BIPV right up there at the very top!
Well, according to a published report on India Infoline, the Indian semiconductor and fab policy has attracted 12 major proposals, worth a whopping Rs. 93,000 crores!
A Press Information Bureau (PIB) release says that the Department of Information Technology (DIT), Government of India, has set up a panel of technical experts to evaluate the proposals.
The promoters will come up to the Appraisal Committee for sanction of subsidy under the scheme once they have reached the threshold limit of investment, as indicated in the guidelines of the Special Incentive Package Scheme.
A majority of these proposals — ten (10) — are for solar/PV. One proposal is for a semiconductor wafer — from Reliance Industries worth Rs. 18,521 crores, and another for TFT LCD flat panels — from Videocon Industries, worth Rs. 8,000 crores.
The 10 proposals for solar/PV are from: KSK Surya (Rs. 3,211 crores), Lanco Solar (Rs. 12,938 crores), PV Technologies India (Rs. 6,000 crores), Phoenix Solar India (Rs. 1,200 crores), Reliance Industries (Rs. 11,631 crores), Signet Solar Inc. (Rs. 9,672 crores), Solar Semiconductor (Rs. 11,821 crores), TF Solar Power (Rs. 2,348 crores), Tata BP Solar India (Rs. 1,692.80 crores), and Titan Energy System (Rs. 5,880.58 crores).
Does the Indian solar/PV story now start making some sense? It is very much in line to become the next big success story for India after the Indian telecom story!
Evidently, Reliance Industries is the major player in all of this, having proposed both a semicon wafer fab as well as a solar/PV fab. Lanco Solar, Solar Semiconductor, Signet Solar, Videocon, and PV Technologies are some of the other big players proposing to enter the Indian semiconductor/fab space.
Well, this is really great news for the Indian semiconductor industry! Further, it comes close on the heels of the announcement of the 3G spectrum policy and MNP policy by the government of India.
A few weeks ago, Dr. Madhusudan V. Atre, president, Applied Materials India, had mentioned that taking the solar/PV route was perhaps, a practical route for India to enter manufacturing. How true are those words!
Late June, I too had proposed, among others points, that Karnataka (and other Indian states) look at having some solar/PV fabs.
Dr. Pradip K. Dutta, Corporate Vice President & Managing Director, Synopsys (India) Pvt Ltd had also mentioned late June that it was too early to write off the Indian fab story. We now have the answer to that question of having fabs in India!
All of this should also excite those investors looking to enter India. The huge interest and subsequent proposals for solar/PV can also lead to India having some of its own solar farms as well!
The India Semiconductor Association should be congratulated for having made this happen. It is soon going to a year since the Indian government had announced the semiconductor policy. Now, with these mega proposals in place, maybe, we will see more investors in the Indian semicon and solar/PV fab spaces.
Top 10 Indian semicon companies review
Another interesting thought! Last year, around this time, I had prepared a list of the Top 10 Indian semiconductor companies. This particular blog has been among the most accessed.
Perhaps, a review is in order! Besides, several Indian players are beginning to make a mark, like Cosmic Circuits, SemIndia, etc. The list of August 2007 mostly had Indian design services companies. This feature of Indian design services companies dominating a top 10 list will probably continue for some more time, till all of these proposals bear fruit into concrete, productive fabs.
I am sure, with those mega investments coming into the Indian semicon wafer IC fab and solar/PV fabs, most of the companies would soon figure in any top 10 list!\
Surely, 2009 should be quite exciting as all of this means a very positive future and outlook for the Indian semiconductor industry.
Finally, the wait’s over! The Indian government today announced the guidelines for 3G (third-generation mobile communications) spectrum as well as mobile number portability (MNP).
First, all players — Indian and global — have been invited to bid for 3G spectrum, making it a truly level-playing field. The condition for a foreign player or telecom operator is that it should have some experience in running 3G telecom services.
Those interested to know more about the guidelines for auction and allottment of spectrum for 3G telecom services, can download the documents from DoT’s site.
Apparently, the 3G guidelines allow 10 players in the Indian 3G space, including both Indian and foreign players.
Spectrum in the 2.1GHz band would be available for the 3G telecom services through bidding/auction. Spectrum shall be auctioned in blocks of 2x5MHz in the 2.1GHz band. As per the DoT guidelines, the number of blocks to be auctioned may vary from five to 10, subject to the availability in different telecom service areas. Should there be non-availability, the number of blocks may be less than five in a telecom service area.
The MNP allows mobile phone users/subscribers to change their operators, while retaining their mobile phone numbers.
As per the DoT guidelines, a customer can approach a ‘recipient operator’ to port his or her number. The ‘donor operator’ cannot re-use that customer’s ported number till such time the ported number is in use. The donor operator can only have the ported number once it has been surrendered by the ported customer.
Well, both of these announcements are going to add to India’s brilliant telecom success story.
As for the foreign players coming into the country, quite a few are already present. It would be great to see the likes of NTT DoCoMo, SK Telecom, China Telecom, China Mobile, Telefonica, etc., enter the 3G space in India. As for 3G technology itself, TD-SCDMA, HSPA, etc., should be considered as well.
Oh yes, there’s some good news for those itching to use the Apple iPhone 3G. Once, the 3G networks are in place, there’s nothing that can stop this from happening.
On the MNP front, a good majority of Indian subscribers are on prepaid. So, there may be quite a few changeovers happening! It could well prove to be a nightmare for the operators, but then, that’s the fun of having a level-playing field and the challenge of playing in the booming Indian telecom market.
Postscrpt: A reader, Abhshek, left a very interesting and relevant comment regarding 3G services that users could be charged heftily. I quite agree with him! The 3G operators would need to price their services right. It should be win-win for both operators and users.
To start off, service charges could possibly be on the higher side, as the 3G licenses won’t come cheap, and operators would also look at the revenue angle. However, over time, service charges are quite likely to come down, if the pattern of the Indian telecom history is repeated. Many thanks for your comment, Abhishek.
This title of this blog has actually been borrowed from a statement made by Gadi Singer, vice president of Intel’s Mobility Group and general manager of the company’s SOC Enabling Group, which I came across on SEMI’s site.
Is this a recent phenomena, or has the Apple iPhone led to a strong belief in this statement that the Internet is truly going mobile? And what was that craze for ‘WAP bashing’ some nine to ten years ago all about? Perhaps, it is a bit of both!
I was fortunate enough to use a WAP-enabled mobile phone back in Hong Kong, in 1999-2000, a Siemens model. I tried checking my Yahoo Mail on the phone with some success. Also, I found it very convenient to search for Indian restaurants in Tsim Sha Tsui. All of this, when the ‘WAP bashing’ was at its peak!
In 2001, at an event organized by Frost & Sullivan in Singapore, I was probably among the three people in a large audience found to be using the mobile phone for Internet access. This is so long back, that even I can’t recall for sure how many folks were really found to be using mobile Internet! Anyhow! Those were also the days when mobile Internet, as a theme, was quite popular at global telecom events, largely driven by the craze for NTT DoCoMo’s i-mode phones.
Well, no one really wanted to accept back then that the Internet was going mobile! Also, the flak that some of the European carriers had to take due to their obtaining various ‘quite expensive’ 3G licenses dimmed the concept of the mobile Internet.
We have come a long way since! While GPRS and 3G did bring some or quite large extent of the Internet to the mobile, possibly, the push really happened when this phenomena called social networking gathered steam.
The Apple iPhone, and now, the iPhone 3G, with its cool wireless social networking applications have truly ported the Internet to the mobile. The iPhone 3G is all the rage right now. Sales crossed the 1-million mark within three days, as per various reports on the Internet. That’s some speed! That’s also an outstanding indication of how people are making a dash for the phenomena called wireless social networking.
In the midst of all of this, 3G, and specifically, HSDPA (and W-CDMA), has come really come to stay. The telecom-media convergence has also happened very seamlessly in the background.
While the world’s leading semiconductor firms continue to churn out one excellent chip after another, especially for mobile phones/telecom, it is time to acknowledge the fact that the Internet has truly gone mobile!
One last word. Do find time to stand up and applaud the hard work put in by the semiconductor and software industry, who make all of this happen.
Right then! The D-day is today… the much awaited Apple iPhone 3G has been launched!
Buyers in New Zealand and Japan were among the earliest to get their hands on the new iPhone. Evidently, the Apple lovers are over the moon and can’t stop gushing about the great features that the new phone has!
All that’s fine!
How can the Apple iPhone 3G help boost data usage? How can it help operators raise the ARPUs? Or, will a high-end phone still be used for voice and data? Will it change the fortunes of the memory market? What impact will it have on the semiconductor market as a whole? We will have the answers to most of these questions by the end of this year, and in some cases, over the next year or two.
Will there be a shift in brand loyalty — for example, from say, Nokia to Apple — even that remains to be seen. Surely, the likes of Nokia, Samsung, SonyEricsson and LG would not be sitting quietly and see the thunder being stolen from them!
Will there be a surge of touchscreen phones all over the world? Probably yes. I’ve had a touchscreen MP4 player with camera since late 2005, but I never really liked that touchscreen, as it always dirties the nice little LCD. Anyhow!
Coming back to the iPhone 3G, I’ve had some interesting conversations with several of my friends across the globe, specifically, Asia.
From Hong Kong, a friend told me that the demand there can be reflected by the fact that there are over 60,000 registrations for buying the iPhone, with today being the official launch day!
However, another friend’s response, who’s actually not an admirer of Apple, simply said that he doesn’t even feel the slightest inclination to even check it out!
From Taipei, Taiwan, a good friend shared the thought that compared to the previous model, the 3G iPhone seems to be cheaper. However, people have been saying that the case is made of plastic and does not feel that good than the previous metal material.
Another friend is thinking of buying the iPhone HTC Diamond or 3G, as the iPhone will not be available in Taiwan till 3Q-08. However, this friend added that some Apple fans plan to buy it via bid Web sites.
A friend from the Philippines, who’s now relocated to Hong Kong, sent me a list of URLs where there are long discussions about the Apple iPhone. The comment — People are going nuts though… the demand is of 60,000 and only 500 units are available!
Yet another, who moved to Hong Kong from China, adds that iPhone 3G has been launched in Hong Kong bundled with ‘expensive’ mobile phone packages. Maybe, the fever is a bit lesser, for Apple fans.
Next, from Auckland, New Zealand, Romy Udanga, my friend and an ex-colleague from Global Sources, very kindly sent me a link titled: Who bought the World’s first iPhone 3G! Apparently, that honor goes to 24-year old Jonny Gladwell, who, at exactly one minute past midnight, walked into the Vodafone store on Queen Street in Auckland and bought the world’s first iPhone 3G, after spending over 50 hours on the street!
Wow! Talk about building up some demand!! It’s really good to see this global craze regarding a consumer electronics product! The buzz is surely back, for now!
The Global Semiconductor Monthly Report June 2008 from Future Horizons, states: Let the market beware; it is no longer business as usual!
I would completely agree! For instance, the industry has since long moved to fabless, and now, fabless firms are ranking among the very best. Or, even from 130nm to 22nm process nodes, or from 180mm fabs to 450mm fabs!! Fair enough?
Coming back to the industry trends, Malcom Penn, CEO, Future Horizons, says that compared with March, the IC units were up and ASPs were down in April, even after adjusting for March being a five-week month. The net result was a 7.7 percent revenue decline! Does this spell more bad news for the beleaguered chip market?
Certainly, this seems to be the industry consensus view. Always the contrarian, Future Horizons’ views are different. Here’s how! April’s results came in exactly as expected. Also, the unit rise and fall was simply the result of the engrained ‘making the quarterly number’ mentality!
Digging beneath the layers reveals a set of market fundamentals that are in remarkably strong form. The penny may not yet have dropped to the table, but, even for the chip industry ever full of surprises, let the market beware; it is no longer business as usual.
Penn says: To paraphrase the late Sir Winston Churchill’s comments on Russia, “The chip industry too is a riddle wrapped up in an enigma”. It marches to its own complex interwoven pattern of rules, each relatively simple when viewed in isolation, but contriving to interact in a volatile and unique way. Right now, the industry is at its most confused [state] for a decade, battered by a barrage of uncertainties and contradictions. Shell-shocked and confused, confidence is off the agenda … just when what is needed most is cool heads and determination.”
Be it falling cap ex, tight capacity, focus on profits, continuing strong market demand, second half seasonal effects, according to him, the forecast tea leaves all seem to be pointing in the same positive direction. Has the worm finally turned then for the industry? He thinks so! Future Horizons also thinks that the “penny has yet to drop and that the impact on the market will be seismic and dramatic”.
Earlier, the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors of $21.8 billion in May were 7.5 percent higher than the $20.3 billion reported for May 2007, reflecting continued strong sales of consumer electronic products. May sales were 2.8 percent higher than the $21.2 billion reported for April 2008.
Do bear in mind that May is historically a strong month for semiconductor sales, as per SIA.
NAND strong minus Apple effect
DRAMeXchange has indicated in its monthly review on the DRAM segment that the NAND Flash prices are likely to gradually stabilize after mid-July pushing by lower price, new demand from 3G iPhone, smart phones and low-cost PCs.
Elsewhere, as reported by Semiconductor International, according to Semico, NAND unit shipments are likely to cross over 3.5 billion units in 2008 as against 2.5 billion units in 2007, leading to a year-over-year growth of 35 percent.
However, reflecting the memory segment’s ASP (average selling price) crunch, NAND revenues will grow 13 percent in 2008, down compared to 25 percent in 2007.” Semico has said that the NAND industry will record a growth year in 2008, without experiencing what it has called the ‘Apple effect’.
Heartening solar initiatives
The one heartening thing to note has been the various solar related initiatives that have taken place over the past month (actually, for over the year!). In fact, iSuppli has probably been spot on while analyzing that investments in solar and semiconductors could be on par by 2010!
SVTC Technologies, an independent semiconductor process-development foundry, announced that its SVTC Solar business unit has launched the Silicon Valley Photovoltaic Development Center in San Jose. Canadian Solar and LDK Solar signing a new agreement for an additional 800MW of solar wafers, besides LDK updating on its polysilicon plant in China.
National Semiconductors also entered the PV market with its SolarMagic technology that maximizes solar energy production. Evergreen Solar, a maker of solar power panels with its proprietary, low-cost String Ribbon wafer technology, signed two new long-term sales contracts. Tokyo Ohka Kogyo Co. Ltd and IBM are also collaborating to establish new, low-cost methods for developing the next generation of solar energy products.
Not be left behind, Intel too is spinning off key assets of a start-up business effort inside Intel’s New Business Initiatives group to form an independent firm called SpectraWatt.
In India, solar has been making rapid strides, especially at the Fab City in Hyderabad. There is a possibility of something similar happening in Karnataka state as well.
Indeed, semiconductors are no longer business as usual! Right?
The ongoing saga regarding spectrum for 3G services, use of dual technologies, etc., reminds me of 2002, the MII, TD-SCDMA and 155MHz! Read on…
Anything on the spectrum spectacle in India makes very interesting reading! It’s as though two sides fighting over a valuable possession. Worth a click!!
We have been following how the two GSM and CDMA lobbies -– COAI and AUSPI -– have been in the news over the use of mixed bands. GSM operators have constantly warned that any move to allocate spectrum in the 1900MHz band to CDMA players would adversely impact their services in the 2100MHz band. We’ve been following what the TRAI, the DoT and others have to say on all of this.
Then AUSPI informed this week that field trials conducted in Hyderabad last week had proved successful. The trial conducted by AUSPI on behalf of the Department of Telecom (DoT) claims that the co-existence of 1900 MHz and 2100 MHz is possible.
Now, we are told that defence would be vacating spectrum by end of this year and India would have 3G services by next year. Hope all disputes are settled amicably and India finally gets to see what 3G services would have to offer.
I am reminded of two things – one, the 3G license auctions in Europe, which nearly brought the wireless house down in the early 2000s, and two, an interesting development in China. I’ll dwell on the second one.
Nearly seven years ago, I happened to break the news on TD-SCDMA (Time Division-Synchronous Code-Division Multiple Access), a 3G technology being developed at that point of time by Datang Telecom and Siemens. That story link no longer exists, so I’m providing a link to another story, mentioned below.
About two and a half years later, around October 2002, the Ministry of Information Industry (MII) in China allocated a total frequency of 155MHz for TD-SCDMA! This, for an untested, untried 3G technology, in a country much larger than India, was and is still unheard of!
Makes me wonder, why did the MII give away so much of spectrum so long back to an untested 3G technology, when in India, we keep hearing reports about spectrum issues, use of dual technologies, etc. Are there lessons to be learnt from the Chinese example?
On TD-SCDMA, much later, in 2002, I also discovered not many had even heard of it in India. However, around the time I reported this 155MHz spectrum story, STING’s Robin Grewal contacted me in Delhi to find out more about this 3G technology! That was the level of interest in 3G and TD-SCDMA, and spectrum in India, at least, at that time. Things have changed since! Hopefully!!
Kudos to my colleague, Idhries Ahmad, for having put together a wonderful piece on fixed-mobile convergence (FMC). I would just like to highlight the trends on FMC in India. FMC is definitely at a very early stage in the Asia-Pacific region itself, and probably nascent in India.
Akshay Agarwal, Ecosystem Partner Manager – India & Korea, Texas Instruments, India forecasts that service providers in India may start with pre-IMS, skip UMA and may jump to IMS directly. Besides, the successful adoption of FMC would also depend on the deployment of 3G and Wi-Fi. Pre-IMS services could mainly be applications such as instant messaging and photo sharing.
The contribution of value-added services (VAS) has been steadily increasing and is likely to form a major portion of FMC revenues in the near future. Even as the FMC services market gains traction, the go-to-market strategy of service providers should be to provide a variety of FMC-compliant dual-mode handsets to customers.
At this point, the Indian telcos are still focused on meeting the high demand for basic voice services, and are gradually opening up to generating demand for converged service offerings.
Rising income, declining handset prices, and an increased awareness of viable mobile services among masses has led to the growing adoption of mobility solutions. The major areas of growth will be the youth segment and the rural areas.
FMC could be the solution to provide rich media services to the end customers. It may facilitate both fixed and mobile operators a magical solution to provide high-end services to subscribers, further entail the convergence of access networks, and help the operators to integrate their forces to tap the huge potential of rural India.