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Semiconductors.Pdf Cover Story hen Nokia, the world’s leading mobile phone handset maker, set up a W plant in 2006 near Chen- nai, the capital of the south Indian state of Tamil Nadu, it not only raised many an eye-brow in the electronics industry, but spawned a new era of manufactur- ing trend in the country. Almost a year down the line, Nokia acknowledged that production of elec- tronic goods in Chennai was cheaper than in Shenzhen, China, the traditional manufacturing hub, preferred by well- known original equipment manufactur- ers (OEMs). India has catapulted to the world league in semiconductor manufacturing. The reasons – a maturing ecosystem for the electronics industry and the policy decisions taken by a proactive govern- ment to attract investments in the elec- tronics industry, particularly semicon- ductor manufacturing. A semiconductor is an essential component in any elec- tronic equipment, be it a television set, a cellular phone, a PC or an audio player. India is now seen as the next hub of semiconductor manufacturing. Already, a number of companies set up by Indi- ans with technical support from global giants have unveiled their plans for the country. According to the India Semiconduc- tor Association (ISA), the premier body of semiconductor companies and chip design firms in India, the country has al- ready emerged as a preferred destination for chip designing and embedded soft- ware purely because of the talent pool. India can now go a step ahead and take up manufacturing of semiconductors for both the world and domestic markets. “Highly dynamic markets demand- ing new product variants/models from companies have forced OEMs/product 12 A Blue Chip Biz India is emerging as the next hub for semiconductor manufacturing, and a number of international chipmakers are unveiling plans, taking advantage of the new government policy, says Shivkamal COVER STORY companies to reduce the product de- The case for serving the domestic 11 per cent of the global electronic velopment cycle time by outsourcing to electronics industry is stronger. Accord- equipment output. companies, especially to India,” points ing to an ISA - Frost & Sullivan report, Another encouraging sign is that the out ISA President Poornima Shenoy. India is developing as one of the largest semiconductor content in the estimat- “Declining margins and research and markets for electronic equipment. In- ed electronic consumption in 2015 is development budgets have forced com- dia’s electronic equipment consumption expected to be $36.3 billion account- panies to look for cost-effective centres was estimated at around $28.2 billion ing for 6.5 per cent of the global semi- without compromising on the quality in 2005. conductor revenues. of work.” It is expected to reach $126.7 billion India offers high potential for elec- What makes India an attractive des- by 2010 and $363 billion by 2015 grow- tronic equipment manufacturing com- tination for semiconductor manufactur- ing at a compounded annual growth rate panies. The estimated production of ing? There are two reasons. The first is of 29.8 per cent. $155 billion in 2015 is expected to that companies, particularly MNCs, can India’s electronic equipment con- create an opportunity of $15.52 billion cater to the rapidly growing domestic sumption in 2003 was 1.8 per cent of for semiconductor companies and also electronics market at cheaper costs by the global electronic equipment out- for Electronic Manufacturing Services sourcing semiconductors from India. put in 2005. It is expected to grow to (EMS) companies. Secondly, India can emerge as an alter- 2.9 per cent in 2007, 5.5 per cent in The cost and opportunity benefits native to China and Taiwan in manufac- 2010 and 11 per cent in 2015. The for companies in the semiconductor and turing semiconductors. consumption by 2015 will be equal to embedded design sectors are also high. Indian Semiconductor Ecosystem (Electronics Industry - Semiconductor Industry Interface) Electronics Industry Electronic Design Automation Design verification companies Original Equipment Manufacturers (EDA) tool companies MindTree Consulting, Sasken Nokia, Alcatel, Wipro, Videocon Cadence, Synopsys, Mentor Graphics, Quality Testing Electronic Manufacturing Synplicity Stag Software Services companies Flextronics, Solectron, NeST VLSI Design Services Product Testing companies Tessolve Design Houses Wipro, Sasken, MindTree Mistral, NeST, Flextronics Consulting, Fab equipment companies HCL Applied Materials Industrial Design Firms Bang Design, Lemon Design, FT Silicon IP companies Fab companies Design MindTree Consulting, Sasken, GDA (proposed) SemIndia, Software Intellectual Embedded Software Moser Baer, Property firms companies Videocon, Sasken, Emuzed, Encore Software, Sasken, Verismo Networks, Hindustan Semiconductor L&T Software MindTree Consulting Manufacturing Company System Integrators Wipro, Tata Elxsi Hardware services & board manufacturing ProcSys, iWave, Peninsula Semiconductor Industry Chip Vendors, Texas Instruments, ST Microelectronics, Intel, Cypress Semiconductors, Freescale, Moschip 14 COVER STORY The fact that intellectual property protection is strong in India is another contributing factor leading to increased outsourcing of design services to Bangalore. INNOVATIVE DESIGNS: A silicon wafer with MIS (Metal Insulator Semiconductor) A direct revenue generation of $43.07 are an integral part of semiconductors. Bangalore, nearly 30 are captive off- billion by 2015 is expected to generate VLSI (Very Large Scale Integration) and shore design centres of MNCs such as employment for 781,780 engineers. The System on Chips (SoC) are at the pin- Intel, Texas Instruments and NXP Semi- indirect and induced revenue generation nacle of chip design. Incidentally, India conductors (formerly Philips). Irrespec- of $33.59 billion is expected to generate specialises in both categories. tive of where in the world an innovative employment of 2.96 million. For instance, as many as 18 out of chip design firm may be located, more Such a forecast will also have a sig- the top 25 chip companies have set up and more of them are acquiring a Ban- nificant impact on India’s Gross Domes- chip design centres in India, making the galore branch. tic Product (GDP). The direct revenue country an emerging worldwide leader in What is perhaps most significant is a generation of $202.57 billion in 2015 is chip design. new tribe of innovative start-ups headed expected to contribute 12.32 per cent Indian chip designers provide design by entrepreneurs of Indian origin (the to the GDP and generate employment of services or work at the subsidiaries of firms may be registered anywhere in the 3.58 million. The indirect and induced global chip companies, especially US world) whose development work mostly revenue generation of $261.69 billion and European firms. goes on in Bangalore and which own in 2015 is expected to contribute 15.90 Industry leaders believe India is be- the intellectual property they create. It per cent to the GDP and generate em- coming a ‘design store’ with a strong is this tribe that is setting out to close ployment of 5.77 million. presence in Intellectual Property (IP) the innovation gap after the services su- The Indian electronics industry, development, integration and embed- premacy is fully established. which consumes semiconductors, is de- ded software services. The VLSI Society When compared to other chip design veloping in a big way. There are OEMs of India estimates the Integrated Chip clusters of the world, Bangalore has the like Nokia, Alcatel and Videocon, who design population in India to be around fastest growing community of VLSI engi- have already set up plants in India. Com- 11,000, while those working on the em- neers – 15,000, next only to Silicon Val- panies specialising in hardware services bedded software add up to 60,000. ley in the US, which has 55 chip design and board manufacturing, system inte- Four cities are driving the growth of services firms employing around 20,000 grators, software IP firms and industrial VLSI design in India. Bangalore is at the VLSI engineers. The industry in the US is design firms have already established top followed by Hyderabad, Delhi/Noida nearly two decades old whereas Banga- their presence. and Chennai. Bangalore is now home to lore entered this premier club less than How will semiconductor manufac- 70 of the 130 firms (including multina- a decade ago. turers benefit from setting up plants in tionals) engaged in chip design in India. The Cambridge cluster has 12 firms India? The major advantage is that they That makes it not just way ahead of the and employs around 2,000 VLSI engi- can source chip design locally from Indi- rest of the Indian competition but one neers. Its work is focused on technology an companies. A chip or microprocessor of the top global clusters in chip design, innovation. Taiwan, whose strength lies is the most complex part of an electronic comparable to Silicon Valley, Cambridge in manufacturing, has three firms offer- device and designing chips is at the top (in the UK) and Taiwan. ing chip design services. Last year, two end of the software value chain. Chips Of the 70 firms designing chips in delegations representing the Taiwanese 16 COVER STORY ÂIT WILL OPEN THE FLOODGATES FOR FOREIGN INVESTMENTSÊ India Semiconductor Association both pre-operative and post-operative technologies in the country. This in turn (ISA) president Poornima Shenoy, a benefits to the industry, which is im- would play a vital role in generation vocal proponent of semiconductor portant even for the development of of a talent pool in the country which manufacturing, tells India Now that the eco-system. would provide a competitive edge to the nation possesses the right ecosys- our people. Therefore, the chip manu- tem for semiconductor manufacturing. How will India benefit from semicon- facturing facility would provide a plat- Excerpts from an interview: ductor manufacturing? form for higher and specialised learning It will open the floodgates for for- in this fast growing industry which has Will India grab a chunk of the semicon- eign direct investment in the country acquired a high priority status in the ductor manufacturing business? and encourage exports.
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