It always gives me great pleasure chatting with Dr. Walden (Wallly) C. Rhines, chairman and CEO, of Mentor Graphics, and vice chairman of the EDA Consortium, USA. 2013 is just round the corner. What lies ahead for the global semiconductor industry is a question on everyone’s lips! How will the EDA industry do next year? For that matter, what should the Indian semiconductor industry look forward to next year?
Three trends for 2013
First, I asked Dr. Wally Rhines regarding the trends in the global semiconductor industry. He cited:
* Growth in communication ICs.
* Growth in the third dimension.
* Accelerated design activity at the leading edge.
Growth in communication ICs: On the macro level, silicon area shipments continue to grow gradually, as do semiconductor unit shipments. However, there’s a major shift in application segments from computing to communications. Communications used to be only one third the size of computing in terms of semiconductor usage.
Communications are expected to surpass computing in terms of semiconductor consumption by 2014 thanks to the rapid growth of wireless applications, the incorporation of computing into communications devices like smart phones and the addition of communications to computing devices like tablet computers.
Growth in the third dimension: Shrinking feature sizes and growing wafer diameters will continue to contribute to the annual 30 percent decrease in the average cost per transistor and average 72 percent unit growth of transistors, but they will do so at a diminished rate. Fortunately, other avenues are emerging that can help sustain the semiconductor industry’s remarkable rate of growth. One largely untapped opportunity is in the third dimension, i.e. growing vertically instead of shrinking in the XY plane.
DRAM stacks of eight or more die are already possible, although they are still more expensive on a cost per bit basis compared to unstacked devices. Complex packaged systems made up of multiple heterogeneous die, memory stacked on logic and interposers to connect the die are evolving rapidly. Layers in the IC manufacturing process continue to increase as well.
Accelerated design activity at the leading edge: Another interesting trend is the recent surge in capital spending among foundries to add capacity at the leading edge. This wave of spending will result in excess capacity, at least initially, which may force foundries to lower prices to boost demand. In fact, capacity utilization data in the last few months shows a dramatic decline in utilization at 28/32nm and 22nm nodes, suggesting that excess capacity is already happening to an extent.
While differences in 28 and 20nm processes—such as double patterning—create challenges, the existing capital equipment is largely compatible with both processes. Such a high volume of wafers and the large available capacity will lead to increasingly aggressive wafer pricing over time. As a result, cost-effective wafers from foundries will encourage totally new designs that would not have been possible at today’s wafer cost.
Industry outlook 2013
So, how is the outlook for 2013 going to shape up? Dr. Rhines said: “After almost no growth in 2012, most analysts are expecting improvement in semiconductor market growth in the coming year. Currently, the analyst forecasts for the semiconductor industry in 2013 range from 4.2 percent on the low side to 16.6 percent on the high side, with most firms coming in between 6 percent and 10 percent. The average of forecasts among the major semiconductor analyst firms is approximately 8.2 percent.
“However, most semiconductor companies are less optimistic in their published outlooks. This seems to be influenced by the level of uncertainty that exists because of unknown government actions and market conditions in the US, Europe and China.”
Any more consolidations?
It would be interesting to hear Dr. Rhines’ opinion on any further consolidations within the industry. He said: “It is common misperception that the semiconductor industry is consolidating. A closer look at the data shows that the semiconductor industry has been doing the opposite. It has been DE-consolidating for more than 40 years.
“Take the #1 semiconductor supplier, Intel. Intel’s market share is the same today as it was a decade ago. And, the combined market share of the top five semiconductor suppliers has been slowly declining since the 1960s. Similar trends also apply to the top ten and top 50—both are the same or lower than they were a decade, as well as decades, ago. In fact, the combined market share of the top 50 semiconductor companies has decreased 11 points in the last 12 years.
I received a report from IHS iSuppli, which stated that China’s fabless market is likely to double by 2015! Well done, China, and all kudos.
According to the report, there are 3Cs – China, Consumer and Convergence — that China has been focusing on. However, there are three more Cs — Culture, Content and Contribution — that the report urges China to focus on.
The report states: “The companies must accommodate and adjust to the differing cultures of overseas customers. They must learn more about end-content sectors that drive the growth of technology markets. And China’s fabless firms must take advantage of government contributions to the industry, given that Beijing has instituted a range of policies designed to improve the fabless industry in areas including investments, tax rates and capital investments.”
Having taken its own sweet time, the Chinese fabless industry is coming up well, and fast! However, what is the state of the fabless market in India?
If one goes back to Dec. 2009, Pravin Desale, VP and MD India operations, LSI Corp., while speaking at Mentor Graphics’ U2U conference, had said that India has only two (2) fabless firms. If this number, or even a number below double digit is considered to be correct, then India surely has a lot of catching up to do!
Now, who are the leaders in the fabless semiconductor business globally? That’s Qualcomm, Broadcom, even AMD (as per 2010 reports), MediaTek and Marvell. Four of these companies are based in the USA, leaving MediaTek as the only Asian (Taiwan) representative.
Do Indian companies have the necessary experience of designing complete chips from scratch? Perhaps, some may have. Can the Indian companies get the silicon manufactured easily (local manufacturing) and later, debugging it? Here comes the first major gray area! Do the Indian companies have easy access to tools? Perhaps, some, most of them, have that access today!
Now, guess what? The last para — I had written about 7 years ago! ;)
Do you, as a semiconductor/VLSI/EDA company, run university or educational programs for colleges and institutes? Am sure, you do!
Well, are you providing these various colleges and institutes with the latest tools and EDA software? Perhaps, yes! So, do you regularly check whether your tool is being used properly, or at all? What do you do if the tool remains unopened or unused? Okay, before all of that, are you even guiding the faculty and students to tackle real world problems associated with chip design?
Do the students (and the faculty) know the intricacies of 22nm, 32nm, 45nm, and so on? Are you able to assist students in taping out? Right, is the syllabus taught in all of these colleges good enough to produce the kind of talent and skills that the semiconductor/VLSI industry requires currently, and in the future? Is everything being taught, the latest?
As they say — it takes two to tango… and, it takes two hands to clap! To the Indian academia — how many among you are “really” serious about being trained on a regular basis by the semicon/VLSI/EDA industry? What have you all done about it so far, all of these years? How many colleges and institutes among you (and do you) regularly put up or raise your hand to the industry and say — we lack the knowledge in a particular area and need training – please help us!
The question is: what are you, as a semicon/VLSI/EDA company, doing about training the various faculty and the students in various colleges and institutions across India? Do you have a proper program in place for this activity? Well, is enough being done regarding the industry-academia collaboration in VLSI education in India? What more needs to be done?
Are you, as a college or institute teaching VLSI, happy with the quality of talent coming out? Are you really satisfied with the quality of B.Tech/M.Tech projects? Do you seek industry’s help regarding training on a regular basis? What steps do you take to reach out to them? And, what are you doing about it all? Do you take that initiative seriously?
For that matter, are there easy-to-use systems that enable effective and industry-relevant education? Are those being made use of properly? Can entry barriers be lowered for students and faculty so they can explore an IP idea that has business potential? How many of the colleges have done this? I know of some folks trying to develop such solutions, but that’s a separate story for another day!
Coming back on track, apparently, some semicon companies and few well known Indian institutes are really exceeding themselves, but the same story does not hold true everywhere. Why is it so?
There could be a variety of reasons, and not all are listed here. Is it a lack of initiative on part of the industry and the institutes? Don’t they even talk to each other? Are institutes not able to approach semicon companies and vice versa? Or, is it the locations of the institutes themselves? Is it that not all institutes are concerned about teaching their students how to solve real world chip design problems?
An industry friend had once remarked: As of the last three-four years, students from the Eastern part of India have no clear pathway that they can pursue to get into VLSI design. The reasons are — there are no training institutes in the East, which can teach Synopsys or Cadence tools or even the basics of Xilinx FPGA design.
A very interesting panel discussion titled Forging win-win industry-academia collaboration in VLSI education was held during the Cadence CDNLive India University conference.
Moderated by Dr. C.P. Ravikumar, technical director, University Relations, TI India, the panelists were Dr Ajit Kumar Panda from NIST Behrampur, K Krishna Moorthy, MD, National Semiconductor India, Dr K. Radhakrishna Rao, head, analog training, TI. India and R. Parthasarathy, MD, CADD Centre.
Let’s see what the other panelists have to say about all of this, and whether they have answers to all of the questions or problems. Well, this is another long post, so please bear with me! ;) Read more…
This semicon blog post is very timely as I keep getting a lot of questions on the topic: what does India NOW offer to the global semiconductor industry in this recession! In fact, several industry friends asked me this question during the recently held ISA Vision Summit 2009.
By the way, I have two good sessions from the ISA Vision Summit 2009 to blog about, and those will happen after this post! So, stay tuned folks!! :)
Back to the key question: What does the Indian semiconductor industry now offer to the world?
My quest for answers took me to S. Janakiraman, former chairman, India Semiconductor Association (ISA) and President and CEO-R&D Services, MindTree. Incidentally, Jani Sir, had highlighted some time ago that despite the lack of wafer IC fabs, fabless India continues to shine brightly! And, I agree with him! Even at Dubai last year, during the IEF 2008, Jani Sir had talked about India’s growing might in global semicon. I consider him to be the right person to discuss how India should frame its semicon path forward.
According to Jani Sir, we will remain in a tough economic scenario for some more time to come. “The cost of R&D, be it development or re-engineering or support is critical for the survival of semiconductor companies, but all of this needs to be done at lower costs. India will continue to be a cost leader to get more engineering done at the same cost or the same engineering done at a lower cost. India will continue to be a safe haven for such investments,” he contends.
India itself is a high growth market that will get sizable in the next five years for the semiconductor companies. No one can understand India and the emerging market requirements than the companies who are located here. That can be leveraged by the world to create value for many products that will serve the emerging market needs.
Janakiraman said: “Indian companies are also investing in technologies and creating intellectual properties/building blocks of technologies. These are the essential elements to create products/solutions in a shorter time-frame when the market starts recovering and builds up the appetite for consumption. Hence, Indian companies need to invest more in such areas and position themselves as value-add vendors to source technologies.”
Newer markets such as electronics in healthcare and renewable energy space provides a level-playing field since India’s maturity level is no less inferior to the western world. “We need to invest, and create solutions and products that can establish India not only as a market, but also a leading technology provider for the global market,” Janakiraman advises.
Has Indian semicon lost its way a bit?
Some folks believe that the Indian semiconductor industry has slightly lost its way since the SemIndia fab debacle late last year. I’ve mentioned earlier that hardly anyone wants to speak about having fabs in India at this point of time. Nevertheless, we’ll need to explore whether the Indian semiconductor industry is still on track!
According to Janakiraman, while the global consumption of semiconductors has seen a drastic drop in Q4 of 2008 and is likely to see a negative growth in H1 of 2009, India will be one among the few markets that will see an increasing consumption through the sales of electronic products.
He added: “The captive and design services companies serving the semiconductor market are facing a head wind, no doubt. However, the impact on them is much lesser compared to what is happening in the rest of the world.”
With the Indian semiconductor market continuing to grow, while the global market is in decline, it is possible that India may end up seeing a slower growth, but with an increased market share.
Janakiraman said: “I see the dynamics in the market will lead to India gaining way for the longer term, even though we can’t escape the short term pains. When the recovery starts, India will gather much stronger and faster momentum of growth as it will be a lucrative market for selling and the lower cost market for sourcing for any of the global semiconductor players.”
Finally, what really needs to be done to get the industry in India buzzing? For starters, don’t give up hope!
Added Janakiraman: “Look at it as an opportunity to get into a level-playing field rather than a losing ground. Consider India as a potential future market. Look at and invest in the emerging opportunities such as healthcare/security/energy, and build products like telemedicine, surveillance systems and power management systems. Invest in idea creation and product management systems, and get ready for the new model of business when recovery starts.”
I wonder why Jani Sir didn’t deliver the keynote at the ISA Vision Summit 2009! He is just the right person as far as propping up Indian semicon is concerned!!
I had ended one of my previous blog posts by saying whether the Indian semiconductor industry was hitting the right notes?
In a continuation to that specific thought, it is necessary to first examine where India stands in the global industry. We are very strong in embedded design and design services — our traditional strengths. While these will hold good for a long time, these are probably not enough to really help India make a serious mark at the global level.
The Indian semiconductor industry, in its current state, needs a rethinking as far as strategy is concerned. Maybe, it cannot survive on chip design alone. Especially in times of downturn, the global semiconductor industry players would be looking for new markets and even customers, rather than low-cost production centers.
Consider these points: In the current economic environment, is the interest in developing new business relations with India really a top priority for overseas companies? Probably not, at this very point of time!
India is also seen more as a source of resource; and the extra resource is the last thing firms need at the moment, given the recessionary climate. What global firms are looking for are new markets and customers, and these points, along with its infrastructure, have been the areas of Indian weaknesses. Maybe, all of this will change, but definitely not overnight! And it needs some more planning.
That leads me to an interesting comment from a reader of my article on CIOL, who went on to suggest that an Indian investor could consider buying Qimonda!
Now that is some serious thought and vision as far as mid- or long-term planning is concerned. However, will there really be any takers for this? If this really happens, fabs can be built in India for memory production. If these fabs perform well, it just might turn out to be a good investment in the mid-term future of the Indian semiconductor industry. Definitely, it will make the world sit up and take notice. The other players would surely give India a look-in thereafter.
Quite a thought! This suggestion of investing in Qimonda is indeed a vision. Can the Indian semiconductor industry develop the courage to show and work toward making this kind of a vision a reality?
I asked him: Does India have the capability to sustain or even build a product development ecosystem? What needs to be done?
He said: “We need the following for this:
* Entrepreneurs committed to product development and willing to take that risk;
* Investors willing to take risk on product development companies;
* Consumption, and this will happen as the economy improves any way, and
* Deep enough technical/technological knowledge/know-how to put reasonably competent end products together.”
According to him, all of these qualities exist in India, and he cited examples of companies such as Sukam, Tejas, etc.
Well, there you have it!
We need enterprising entrepreneurs in India who are committed toward product development and willing to take that risk, especially in semiconductors. We need investors who can believe in things like even buying Qimonda, or some other company. After all, isn’t this what everyone’s been saying: this is the time to buy!
Dream big, India!