Archive

Archive for the ‘fab spends’ Category

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

August 6, 2012 Comments off

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! 😉

Global semicon industry update Mar. ’10: Time for a reality check…pessimism has swung too far, says Future Horizons


January’s WSTS results continued to follow the underlying industry recovery trend, with ICs sales up 4.8 percent versus December (on a five-week month adjusted basis). They were also up 73.7 percent versus January 2009, a relatively meaningless number other than to recall just how bad things were this time last year.

The real significance of January is its potential impact on first quarter sales. Were this run rate to continue through February and March, first quarter sales would be up 8 percent versus Q4-09. That would make 2010 grow a staggering 40 percent on 2009. This is by no means a forecast but it does serve to illustrate the strength of the recovery from the abyss this time last year.

Ignoring the structurally (and typically) wild individual monthly fluctuations – which simply means no single month is a good indicator of the underlying trends – the month on month numbers will not settle down until the second quarter of 2010. That being said, given the likely strength of the first quarter versus Q4-09, our current 22 percent forecast for the total year now looks far too low.

Our 22 percent forecast for 2010 was based on the relatively benign quarterly growth pattern of -1.0, +1.0, +6.2 +2.0 percent; in essence a very weak year. No one we speak with is seeing a negative first quarter, with a consensus now building for at least 3 percent positive growth. That alone would bring the year on year growth up to 28 percent.

At the same time, almost everyone is also boasting a strong Q2 backlog with price stabilisation, even increasing; low inventory levels; and tightening supplies, which places severe doubt on the credibility of our plus 1 percent second quarter growth forecast. Were this to be say plus 3 percent, the year on year growth would be 30 percent.

It does however give us further confidence in our analysis and now places our forecast at the low end of the forecast range. Barring an epic 9/11, Act Of God or immoral banker style disaster, growth of anything less than 22 percent in 2010 is now all but impossible.

We fully expect to be increasing our forecast to around the plus 30 percent level at our forthcoming IEF2010 International Electronics Forum in Dresden, May 5-7 bringing the 2010 market within spitting distance of $300 billion in revenues. Read more…

Chip market outlook: Back to normal abnormality? — Malcolm Penn @ IEF2009, Geneva

October 1, 2009 1 comment

Malcolm Penn, Chairman & CEO, Future Horizons.

Malcolm Penn, Chairman & CEO, Future Horizons.

Future Horizons has revised its 2009 global semiconductor industry forecast to -14 percent growth (+/- 2 percentage points). This was revealed by Malcolm Penn, Chairman & CEO, Future Horizons, while delivering the company’s forecast at the ongoing 18th International Electronics Forum (IEF) 2009 in Geneva, Switzerland, which ends here tomorrow. “He said, “It’s all about good management … only the bad times tell!”

Some of Penn’s other forecast summaries include:

* Economic recovery is said to have already started from 2H-2009.

* Further ‘50 percent’ cap ex reduction.

* Memory price recovery 2H-2009.

* Still lots Of blood on the road near-term

* Strong will get stronger as weak go to the wall.

* Watch for tight capacity starting 2H-2009.

* Crisis is the time to implement change (brings out the best and worst).

* R&D/new products/sound marketing will win (not counting pencils and scrapping the free coffee).

Outlook for 2010 and beyond

Penn also presented the company’s outlook for the global semiconductor industry for 2010 and beyond. These include:

* 2010: +19 percent based on: continuing recovery momentum (NB … this could be a lot, lot higher).

* 2011: +28 percent based on: peak of the structural cyclical boom (NB … this could stretch into 2012).

* 2012: +18 percent based on: normal cyclical market correction starting 2H-2012 (1H-2013?).

* 2013: +3 percent based on: market correction in full flow (NB … this could be negative).

The year 2014 could well see the start of the next cyclical recovery! Given the impending 2010 fab shortage, the upside for 2010-12 is said to be huge.

The 2009 forecast – how did we do so far?

First, let’s look at the 2008 forecasts:

Q4-08 Forecast (Jan): -22.5 percent, making overall Year -2.3 percent

* Q4 (Dec) Guidance: (Intel -20 percent, Nvidia -40/-50 percent, Broadcom -20percent/-23 percent. TSMC -30 percent, Others –20/-50 percent-ish

* Q4-08 Actual: -24.2 percent, making 2008 YoY -2.8 percent (both slightly worse).

Now, on to the 2009 forecasts:

* 2009 forecast (Jan): -28 percent.

* Q1 -20 percent (continuing Q4’s decline, but at a slower rate).

* Q2 -2 percent (market settling down and decline bottoming out).

* Q3 +12 percent (normal, but slightly subdued seasonal and structural growth).

* Q4 +3 percent (normal 4th quarter seasonal slowdown).

* Q1-09 Actual: -15.3 percent (better than Jan. forecast). Jan., not March, saw start of correction to Q4-08’s over-reaction.

* Q2-09 Actual: +16.9 percent (Much better than Jan. forecast). Also, Q1 (not Q2) was the trough with a strong April-June rebound.

* Q3-09 Outlook: +12 percent (No change In Jan. or Jul. forecast). The Q2 inventory correction spurt over with ‘normal’ seasonal growth.

* Q4-09 Outlook: +3 percent (No change in Jan. or Jul. forecast). The normal 4th quarter seasonal slowdown.

2009 Forecast (Jul): -14 percent (Much better than Jan. forecast/no change from Jul.). Minor downside risks (Q3 +8 percent and Q4 +2 percent. making year -16 percent). There is a significant upside potential (Q3 +16 percent and Q4 +4 percent, making year -12 percent).

What’s changed since January’s IFS2009?

According to Malcolm Penn, Future Horizons’ ‘Rose Glass’ scenario came true! He said: “We correctly forecast the pattern of the recovery. The rebound came one quarter earlier than expected.” Given below is a snapshot of what’s happened since the IFS2009 in January.

In January, the world was reeling from Q4’s unprecedented collapse with December peppered with last minute Q4 downward guidance warnings. Everyone was affected – from Intel downward, the collapse was a total meltdown and completely across the board – covering all markets and regions.

Next, there was absolutely zero visibility into the first quarter guidance. Many firms refused to even comment. Some said, “We Simply Have No Idea!” Others offered such a wide range of options that the guidance was meaningless.

The December’s WSTS results (released early Feb.) showed December (and hence, Q4) slightly worse than the Oct/Nov momentum at -24.2 percent (vs. –22.5 percent). The March’s WSTS results (released early May) showed March (and hence, Q1) slightly better than the Jan/Feb momentum.

In brief — from meltdown (Q4-08) to stabilisation (Q1-09) and rebound (Q2-09) in three quarters — even for the chip industry dynamics, this was unprecedented, said Penn.

I will be adding more here, a bit later… stay tuned!

%d bloggers like this: