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Indian semicon industry: Give it time, you will see the results

May 17, 2007

Continuing from my previous blog, I’d like to mention here that Gartner, as well as some others, do point out that the Indian semiconductor industry is still in a nascent stage. We are all well aware of that!

A semicon policy has recently been announced to attract investments in semiconductor manufacturing. About five players announced plans and some have submitted proposals to the government. It will be at least another two years before things start rolling.

S. Janakiraman, president, ISA, and president & CEO – R&D Services, Mindtree, elaborated that the Indian government had, for the first time, come out with an exclusive policy for the semiconductor industry. This policy should provide significant boost to the manufacturing sector.

The ISA had closely worked with the Indian government to structure the policy to meet the expectations of the industry, while protecting the countries interest in terms of the right size of investments as well as right technologies being deployed.

The impact of the policy on the manufacturing sector will take time, but when it does becomes reality, it will create significant positive impact for the semiconductor sector.

There is also a clear interest by all leading IDMs as well as fabless semiconductor companies in looking at India as a destination for complex design sourcing, as well as increase their market share in a growing market.

Manufacturing of electronics has seen remarkable progress in the last 18 months with majors such as Nokia, Motorola, Flextronics and Foxcon now investing in India. Similar thrust in investments in semiconductor fabrication, test and packaging is not far away.

Technologies are fast evolving and mixed signal is becoming reality. Geometries of semiconductor technology is also shrinking, from 90nm to 55nm and even 35nm. Not only that, India is now in a position to talk about a multilayered chip or a 3D chip.

Pradip Dutta, president, Synopsys, believes all local and global majors based in India are poised for growth. Global majors will likely continue to leverage on the talent available. There will likely be even more emphasis on high-end design as well as determining the go-to-market strategy.

Whether it is the frequency, number of gates, high complexity, etc., all of those would be driven by applications. India is now ready for doing high-end
complex designs. All of this really augurs well for the Indian industry.

Kamal Aggarwal, VP – Marketing and Strategy, SoftJin Technologies, told me that the semiconductor market, globally, is likely to grow close to 10 percent during 2007. In India, it is likely to grow much faster due to the high growth in electronics consumption, maybe, around 30 percent.

Some observers feel that fabless is the best way to go for India, in order to tap our engineering talent in chip design and let the foundries in Mainland China and Taiwan give India the best wafer prices and help us keep up with ever reducing geometries.

These countries have the infrastructure for this R&D and we (India) have the engineering talent. Yes, I agree that this is a separate issue. There may not be several fabs as many think it would be. It’d probably be a mixture of maybe four or five fabs (my estimate) and lots of fabless companies, along with the ancillaries.

India should also encourage fabless semiconductor chip companies (product companies), give them concessions and tap into the US $300 billion semiconductor component market as well. All of this will happen, just give it some time folks!

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