Yes, looks like it!
First, on August 31, the India Semiconductor Association and the UK-TI would be signing an MoU. The next day, September 1, there is a presentation by Ministry of New and Renewable Energy and key officials on the government of India’s policies to the industry!
Next, on September 4, the DIT Secretary R. Chandrasekhar and the Additional Secretary, will be interacting with semiconductor companies in Bangalore.
Further on, September 16 is the day when the Union Minister for New and Renewable Energy, Dr Farooq Abdullah, will be interacting with a small group of industry leaders at a solar PV conclave in Hyderabad!
That’s quite a lot, within a span of 15-odd days! Must say, this augurs well for the Indian semicon and solar/photovoltaics industry.
Interestingly, a lot of the big events are focusing on solar. So, my hunch is that the Indian solar industry may have some serious announcements to make in the coming weeks. Should that happen, I hope to bring those to you, time permitting.
TI bids for Qimonda’s tools
Oh, by the way, there’s news all over the Internet about Texas Instruments (TI) placing a bid of $172.5 million for Qimonda’s 300mm production tools from its closed DRAM fab. While this highlights TI’s focus on building the world’s first 300mm analog fab, I can’t stop wondering, what would have happened had an Indian investor really bought Qimonda!
I am intrigued to see lots of great things happening in the Indian semiconductor industry, and equally frustrated to find certain things that I feel should happen, not really going the way they should!
Yes, India is very strong in the semiconductor related chip design services. However, do keep in mind folks that design services have been impacted a bit by the recession as well! There have been calls from several quarters for India to now start thinking beyond its chip design services. Therefore, are there any areas that India can look into within the semiconductor space?
Leverage strength in software
Certainly, value add in products are heavily influenced by the embedded software in addition to features of the chips, says S. Janakiraman, former chairman, India Semiconductor Association (ISA) and President and CEO-R&D Services, MindTree. “The Google Android is a great example of that. India should leverage its strength in software to enhance its value add to semiconductor companies,” he adds.
Innovation is now shifting from the development of new technologies to the creation of unique applications.
“Mobile browsers and management of remote appliances to save power at home/office are examples. We need to innovate new applications that can drive the need for more electronic gadgets, and in turn, the need for more semiconductors,” notes Jani Sir.
Rethink on Indian fab strategy?
One of my earlier posts focused on whether an Indian investor could buy Qimonda’s memory fab, and somehow kick-start the India fab story! I did find support from many quarters on this idea, but till date, I don’t think anyone from India has made a move for Qimonda. At least, I haven’t heard of any such move.
Nevertheless, some folks within the Indian semiconductor industry and elsewhere have called for India to rethink on its fab strategy.
What should it be now? Or, shall we just discard this and go on, as India has been doing fine without fabs so far? Perhaps, the last option is easier!
According to Janakiraman: “Perhaps, we should consider where semiconductor technology will be after five years from now, and prepare grounds for that through encouragement of fundamental research, as well as shuttle fabs to enable prototyping. We should skip the current node of technology and make an entry into the one that will be prevalent after few years.” Now, that’s sound advice! Will it be easy to achieve?
“That may not be as easy to achieve for the private enterprises considering the cost involved,” adds Janakiraman. “It has to be a mission of the nation to create that infrastructure and later privatize.”
According to him, it is not unique to India. “Every country, be it Taiwan or China, have done it. The only other way is to heavily subsidize and support fabs like those in Israel or Vietnam, but it will be tough to choose a partner in a democratic country like ours, wherein every investment and subsidy is seen with a colored vision,” he says.
To sum up, a fab for our country will be fundamental to gain leadership and self reliance. It cannot be ignored totally, although we can take our own time to reach there. Janakiraman adds, “We don’t have a choice other than paying a price to reach there, now or later!”
The picture here shows the ISA Vision Summit 2009 being inaugurated by the Guests of Honor, Dr. Debesh Das, Honorable Minister-in-Charge, Department of Information Technology, Government of West Bengal and Dr. Arunachalam, Chairman & Founder, Centre for Study of Science, Technology and Policy (CSTEP), Bangalore. Standing by are Jaswinder Ahuja, ISA Chairman, and Ms Poornima Shenoy, ISA President. Congrats on putting up a great show to the India Semiconductor Association, despite all the recession around us.
The opening day was largely built around sessions such as Local Products: Emerging Opportunities; Indian Design Influence: Ideas To Volumes; and Embedded Software: Its Growing Influence on the Hardware World! Yes, all of these were very interesting sessions.
However, there was no word on the Indian semicon policy, or even about India’s plans to have (OR not have) a fab! There was very little about how to incubate and handhold start-ups, and help them grow bigger! And, even less about how to go about building a successful product company in India!
It is in all of these areas, I felt, that the ISA Vision Summit 2009, lacked the punch! Last year, the enthusiasm was quite evident! The Indian semicon policy had been announced in late 2007, and the fab plans looked very much in line! However, it seems, this year, no one’s willing to bet on fabs, or rather, even speak about them!
One gentleman discussed my post on the possibility of an Indian investor buying Qimonda, and even cited examples of how looking at certain memory fabs in Taiwan won’t be quite out of line! Yes, this is exactly the time to invest and think really big, India!
Let me also highlight a comment left on my Qimonda article on CIOL by a reader, who calls himself/herself as “The Edge”. BTW, dear friend, I have not at all back-pedalled! Rather, I have been screaming hoarse, and loud enough to perhaps, land in the bad books of some industry folks :) Well, here’s what “The Edge’ says:
“Ed, I happened to read your blog and notice that you have already back pedalled a bit (though the outrageous comment has not provided reasons as to why he/she feels that way.) I’ll provide some reasons as to why India should look to invest NOW and not two years later when the markets start to look up.
1) Fabs are shutting down or idling at the moment: In this scenario, equipment vendors will be more than happy to get rid of inventory even at huge losses so as to keep some business going.
2) Onus on product development: This is evolutionary and will come along with experience; akin to a baby crawling before it begins to walk! How about jumping into the foundry business first and playing a minor role in product development for the time being? The role and the direction of development will evolve over a period of time. Just as importantly, one has to be in total control of the full life-cycle of the product. Else, there will be that missing link/experience between optimum design and subsequent efficient manufacturing.
3) Technical know-how: Reverse brain-drain and attracting of expats to move to India is easier during the downturns, when intelligent folks might get laid off and would be available for a lot lesser (if at all) compared to the boom-times. Most importantly India has NOTHING to lose. This can be the first serious foray into the semicon manufacturing sector, if the money goes in now. NOT two years later, because by then, the set-up costs would be that much higher and personnel/partners/acquisitions would be hard and expensive to come by in a good market scenario. An early start, i.e., right away, will position the semicon manufacturing industry (along with whichever partner/acquisitions) to be ready to make full use of the next peak in the industry. That big name might well be Qimonda or maybe some other innovative company that might have been reduced to a pauper during this downturn.”
This is absolutely something I agree with and am passionate about! Even though others called my post out of line, and outrageous, it does not matter. I have high hopes for the Indian semicon industry, and as I was telling an industry friend today: I will continue to write about what I think should be done!
Coming back to the ISA Vision Summit, this morning, Nandan M. Nilekani, Co-Chairman of the Board of Directors, Infosys Technologies Ltd, in his keynote, highlighted communication, healthcare and energy as the key domains for semiconductor industry to leverage for potential business. The solutions should be scalable and low cost. Quite rightly so! Indian solutions to solve Indian (and global) problems are the need of the hour. Nilekani touched on India’s demographic dividend, which gives the country the rare advantage over the rest of the globe.
However, I wonder whether developing these solutions alone will be enough to pull the Indian semiconductor industry right to the top! A lot of people at the event wanted to hear my views, and as far as I am concerned: A lot more needs to be done!
Prof. Rajeev Gowda, IIM-Bangalore, the moderator for the opening session, Local Products: Emerging Opportunities, struck the nail on its head, when he said in his opening remarks that while Bangalore had become an IT center, it had yet to become a knowledge center. He stressed on the need to get people to think creatively and innovatively. If only, this was as simple as it seems!
Can the Indian semicon industry innovate? Or, will it find it hard to get out of the rut it seems to have run into, as far as fabs are concerned? Will it finally find some way of incubating, building and growing product companies? I am still awaiting a good answer, rather, any answer!
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!
“Let’s start from the very beginning! A very good place to start!!”
Hope you all remember this lovely song sung by Julie Andrews in The Sound of Music!! So, what’s the connection?
Right! Last week, I blogged about how the global semiconductor industry is likely to drop by 28 percent in 2009, while the Indian industry should grow by 13.4 percent during the same period, and that, we should not get carried away by these statistics!
A moment to ponder: isn’t this drop of 28 percent too high for the global semicon industry? Or, is the situation really that bad? So, let’s start from the very beginning, and go straight to the source — Malcolm Penn!
Revival likely by 2010?
Here’s what Malcolm Penn, CEO and founder of Future Horizons, had to say: “Fraid not! It could even be lower, but remember that this is a year on year number. It is based on the following assumptions: Q4-08 down 22.5 percent vs. Q3-08; Q1-09 down 20 percent vs Q4-08; Q2 down 2 percent vs Q1; and Q3 up 12 percent vs Q2, and Q4 up 3 percent vs Q3! And, if this pattern runs true, 2010 will be up 28 percent vs 2009!”
Voila! The global semiconductor industry could well be in for a major revival next year itself! Why, even Bill McClean, president of IC Insights, took a more optimistic look at the state of the industry in light of the current global economic situation at the recently concluded SEMI ISS 2009 conference!!
Continues Penn, “The actual Q4 results (released this Sunday) were down 24.2 percent, slightly worse than our estimate.”
How to get the buzz back in semicon?
It has been said that the current situation the global semiconductor industry finds itself in was fueled by greed and short-term business goals. So, who were the culprits? Weren’t they warned earlier?
Adds Penn: “It was more complex that that! The woeful state-of-the-world economy was a consequence of debt, greed and irresponsibility; political self interests and short-term business goals, aided and abetted by compliant governments; ineffective regulators; imprudent institutions; incompetent management; irrational self delusion and vested self-interests! No one is blameless for this crisis! Concerns were raised, but the human nature is often irrational, and the ‘easy option’ always the one of choice.”
So true! Perhaps, the ‘easy option’ factor seems to be affecting the Indian semiconductor industry as well, but more of that later!
The key issue today is: what needs to be done to get the buzz back in the global semiconductor industry? The answer probably lies in the following: in the short-term, it involves rebuilding the industry confidence, and in longer term, it involves a radical return to ‘old fashioned’ business and political values.
On another note, I was curious to know how the EDA segment is doing? Penn said, “No better, no worse than normal, technology marches on, new designs accelerate in a downturn.”
Memory is another segment that’s been hit hard. In fact, the other day, someone asked me why Qimonda’s story was so important!
Another could not understand what Spansion really did, and why it had announced this January 15 that the company was exploring strategic alternatives for a sale or a merger! Doesn’t matter! Memory is a very tricky business, and semiconductors is the mother of all such tricky businesses! Perhaps, isn’t that why they once said in jest: “Real men have fabs!” Anyhow!
Coming back to memory, when can the industry expect some recovery in NAND? More importantly, will the various government interventions help? Qimonda also recently petitioned for the opening of the insolvency proceedings.
Penn is clear: “NAND will recover when the excess capacity abates, and that will take several more quarters. The government intervention won’t help, rather the opposite, and it will exacerbate the excess capacity issue.”
Fab spends to move up only by Q1-2010
Earlier, Penn predicted a recovery in 2010 with the resumption of growth in Q3 2009. What will make this happen? He says, “A recovering world GDP growth, plus a return in business confidence.”
However, those keen on fabs, do not expect the fab spends to look up any time soon! In fact, Penn estimates fab spends to start moving north not until Q1-2010 at the earliest.
The Chinese impact!
Interestingly, China is set to see negative growth of 5.8 percent during 2009. It will be worth noting how much of this this impact the global semiconductor industry.
Point one, compared to a global semicon fall of 28 percent in 2009, Penn considers a fall in China’s semicon fortunes of 5.8 percent to be ‘darned sight better!’ So, China should still be a high growth market (relatively speaking).
Like I mentioned earlier, the Indian semiconductor industry is perhaps getting affected by the ‘easy option.’ Design services continue to do well, hopefully, but when it comes to real semiconductor product companies, those are far and few.
And, I haven’t seen any real activity in the recent past that could tell me more such initiatives are in the pipeline. Nor do I think there are many attempts to even incubate such companies. On the contrary, there’s a mad rush toward solar!
No harm there! Solar is great for India and the need of the hour. However, India should not forget its semiconductor priorities as well! Indian simply cannot bank on chip design services and solar gains, and then proclaim that it has a very successful semiconductor industry! Real action is still quite far away.
I think, India needs to rethink its semiconductor strategy! It cannot survive on chip design alone.
“When you know the notes to sing, you can sing most anything,” concludes the song from The Sound of Music!
So, is the Indian semiconductor industry hitting the right notes? That’s going to be my next blog post, friends.
Browsing the Web these past days has brought me to various stories, mostly discussing the various bail out plans being provided for some leading DRAM makers.
It all started with Germany based Qimonda announcing that it has arranged a Euro 325 million financing package for the ramp up of its innovative Buried Wordline technology.
Yesterday, Hynix, the Korean DRAM maker, received a bail out of $597 million, according to reports on Fabtech. The story also reports that Powerchip Semiconductor, Taiwan’s largest DRAM maker, is also seeking new funding.
Then, DigiTimes, a very good technology news Web site from Taiwan, reported yesterday that Taiwan’s Ministry of Economic Affairs (MoEA) had reportedly developed an NT$200 billion (US $6.5 billion) bail out plan for Taiwan’s hard-hit DRAM makers.
Sitting in India makes it a little difficult to speak with global companies based in Taiwan, Korea and Germany. I sometimes wish I could get some help from reliable sources as to what’s the actual ground situation.
Having said that, it is good to see various national governments showing their deep concern about the state of the global DRAM industry and about technologies. And, let us keep all criticisms aside, as to who performed and who didn’t! Here’s a lesson for India to learn from, as closer home, it has a semiconductor industry really in its infancy!
Right now, the global semiconductor industry is facing a downturn and memory is the hardest hit! Hence, if any measures are being taken to somehow bring DRAM back on track, it should be welcomed.
Qimonda, Hynix, Powerchip, etc., are not small names in the global industry. Poor performance from memory players saw them dropping out of the top 20 global semiconductor players’ rankings in 2008.
All the lifelines being provided to these major players now means that these companies need to pull it off, somehow, and extricate themselves from the depths they have fallen into. If they fail, they will perish! And, they all know that!!
I’d be very keen to see the responses of DRAMeXchange and iSuppli on these bail out plans.
Merry X’mas everyone, and hope you all have a great time!
PS: I have iSuppli’s feedback!
Speaking on the Taiwan government’s bail-out plan as well as Hynix’s rescue package from banks, John Lei, Analyst, memory, iSuppli Corp., said: “In general, Hynix’s package is much like a short-term relief for their near-term debt, while the Taiwan government aims at the possible consolidation of five suppliers.”
“All these packages could bring more uncertainties to the maket, however, based on iSuppli’s assumption and forecasts. The industry operation profit margin will hit bottom in Q4-08, but profitability of the industry will not occur until Q4-09,” he added.
iSuppli’s just issued a warning that 2009 could well see the coming of a solar market eclipse!
Come to think of it! Just last week, in the Semiconductor International webcast, the analysts did mention that there could be tough times ahead for solar! In fact, Aida Jebens, Senior Economist, VLSI Research Inc., did indicate that solar/PV would pick up in the next two years and that 2009 could be a tough year.
If you look at the India situation, I have been getting the feeling all the time that all of a sudden, too many companies were entering this market segment, as though it is a land of promised gold! Perhaps, it is, and one sincerely wishes that all of those investments proposed for solar do not come unstuck.
This August, following the announcement of the national semiconductor policy (the Special Incentive Package Scheme, or SIPS), the government of India received 12 proposals amounting to a total investment of Rs. 92,915.38 crore. Ten of these proposals were for solar/PV, from: KSK Surya (Rs. 3,211 crore), Lanco Solar (Rs. 12,938 crore), PV Technologies India (Rs. 6,000 crore), Phoenix Solar India (Rs.1,200 crore), Reliance Industries (Rs.11,631 crore), Signet Solar (Rs. 9,672 crore), Solar Semiconductor (Rs.11,821 crore), TF Solar Power (Rs. 2,348 crore), Tata BP Solar India (Rs. 1,692.80 crore), and Titan Energy System (Rs. 5,880.58 crore).
Then, late September, Vavasi Telegence (Rs. 39,000 crore), EPV Solar (Rs. 4,000 crore), and Lanco Solar (Rs. 12,938 crore), also announced major investments.
Now, given the quite ruthless kind of financial crisis the world is currently engulfed in, several have raised doubts whether solar players would be able to get the credit they need. Or, would they run into rough weather?
On paper, some of these companies are big corporate houses, with several years of standing. However, reality can be quite different, and can bite! I’ve yet to hear whether all of these companies have managed to raise the requisite capital. One sure wishes that they have all been busy and will be successful!
Otherwise, all one needs to look at is iSuppli’s warning. According to iSuppli, ‘Bringing an end to eight consecutive years of growth, global revenue for photovoltaic (PV), panels is expected to plunge by nearly 20 percent in 2009, as a massive oversupply causes prices to drop.’
Will it be a case of massive oversupply in India? We haven’t exactly started. Hence, perhaps, we will come to deal with oversupply later. The key thing is to get all of these solar/PV projects off the ground!
The India Semiconductor Association (ISA), and now, SEMI India, have been promoting the solar/PV industry very aggressively. The work they’ve done so far has been commendable, and I’ve been witness to all of their activities. However, keep in mind that these are only industry associations, who can only advice, guide, debate and promote the industry, and also provide industry statistics for everyone to consume.
The real action can only happen once the proposals have been cleared by the Indian government and the players have managed to arrange for the requisite capital for their projects. The Indian fab story with SemIndia is all to familiar, and there should not be a repitition with solar/PV projects.
Therefore, the role of the government of India will be extremely critical and crucial. The good health of the Indian solar/PV industry is entirely in its hands, and not in the hands of the industry associations.
Perhaps, the Indian government could do well to look at how the Taiwan government is playing a critical role in reviving the hard hit DRAM industry and also at the German free state of Saxony, which has played a key role in financing the ailing Qimonda.
Otherwise, the Indian solar/PV industry could get hit, even before it takes off the ground! And, as a nation, we cannot afford that to happen!
India has so far has had a good story going in solar. There are hopes that solar/PV will trigger off a spate of manufacturing activities in India, besides creating lots of jobs. Don’t think we can afford to spoil all of this!
The industry in India is still very much in its infancy. Let the baby play happily in the water (solar) tub, instead of throwing the water out! This baby needs a lot of hand-holding to get stronger in the years to come.