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Aftermath of Japanese earthquake: Implications for global electronics industry!
This is a commentary on industry trends from Malcolm Penn, chairman and CEO, Future Horizons.
Importance of Japan
Japan is a major producer of semiconductor components accounting for around 22 percent of global semiconductor production. The Flash memory market sector – crucially mobile phones, iPads and their derivatives, digital cameras, and portable storage devices, account for approximately 50 percent of the market, almost all of which are produced by one Japanese firm, Toshiba/Sandisk.
Several of Japan’s major semiconductor companies locate their manufacturing spots in the northeast prefectures, for example Toshiba’s 8-inch wafer fab in lwate, Renesas Electronics’ factories in Aomori, Hoddaido and Yamagata, Elpedia Memory’s backend manufacturing facility in Akita and Fujitsu’s plants in Fukushima.
The effects of the devastating earthquake, which hit Japan on Friday 11th March, are already beginning to take hold on the global electronics industry. Damaged buildings and infrastructure and halts to some semiconductor fabs will without doubt have a knock on affect upon the global semiconductor supply chain, with many of the big names, i.e., Nokia, General Motors and Apple already experiencing supply shortages.
Many manufacturers, not directly hit by the earthquake, have experienced power failures interrupting production; just a microsecond power supply glitch can result in the scrapping of weeks of in-process production, and with manufacturers no longer holding inventory it will impact IC supply availability in Q2. To what extent, still remains to be seen. The impact will be felt both in the long and short term, affecting not only the semiconductor supply chain but nearly every other industry imaginable, as it is very rare these days to find an industry which is not reliant on chips.
Component prices
As in any shortage situation, component price increases are inevitable and this has already happened in memory, although it is not yet clear how much of this is panic profiteering and how much is sustainable. But shortages are inevitable and recovery due to the long production cycle times and already tight capacity – will not happen over night.
Automakers
The automotive semiconductor market grew 37 percent in 2010, clearly leaving the problematic 2009 behind. However the recent earthquake in Japan has once again awoken auto manufacturers concerns about the industry. Even before the earthquake purchasing managers had expressed concern about supply levels; inventories were unusually low, resulting in heightened concern from purchasing executives around the world.
It is difficult to estimate the extent auto manufacturers will be affected, but following an official announcement from Japan that car production will be down 33 percent from its normal monthly production level of 750k cars per month to 500k it looks as though the 2010 market growth may be short lived.
Toyota Motor Co, the worlds largest auto manufacturer, said all 12 Japanese assembly plants would remain closed until at least 26th March and it was not sure when they would re-open. Production lost between 14-26 March would be about 140,000 units. Read more…
Top 10 electronics and telecom industry trends for 2011
Here are the top 10 trends in electronics and telecom for the year 2011.
Each one of the trends have been taken from the existing posts, and they seem to be going full blast ahead in 2011. First, the top trends in electronics.
1. More tablets and portable electronics devices should make an appearance.
2. 3D TV without glasses should be talk of the town. 3D TV should enter the family in 2011.
3. Penetration rate of LED TV to accelerate.
4. Further improvements in digital TV connectivity — Silicon Image’s ViaPort technology needs to be watched.
5. Fully IP-connected digital TV platform — Inview and Trident Microsystems announced Neelix.
6. Plethora of new DisplayLink certified devices hit the market.
7. E-readers will grow, but at the risk of getting commoditized.
8. There will be more of SSDs.
Now, to the top trends in telecom for 2011. Again, these are likely to make the top news in the coming year. Presenting the top telecom industry trends for 20111.
1. There will be much more of the connected devices.
2. Naturally, there will be more mobile phone applications!
3. Bluetooth will emerge as a wireless standard for smart energy.
4. There will be much more traction for TD-LTE! So, where does it leave WiMAX?
5. Femtocells — well, see more of it in the coming year.
6. Now, look out for in-car Wi-Fi.
Happy new year to my friends and well wishers. 😉
Round-up 2010: Best of electronics, telecom and technology
Year 2010 has been a good year for the global electronics industry, rather, the technology industry, coming right after a couple of years of recession. Well, it is time to look back on 2010 and see the good, bad and ugly sides, if any, of electronics, telecom and technology.
Presenting my list of top posts for 2010 from these three segments.
ELECTRONICS
Electronics for energy efficient powertrain
Photonics rocks in India @ APW 2010, Cochin!
Plastic Logic’s QUE proReader looks to mean business!
Growing Indian power electronics market provides host of opportunities
Philips focuses on how interoperability, content sharing drive CE devices!
Is this a war of tablets, or Apple OS vs. Google Android?
India needs to become major hardware player!
Roundup of day 2 @ Electronica India 2010
Strategic roadmap for electronics enabling energy efficient usage: Venkat Rajaraman, Su-Kam
NI stresses on innovation, launches LabVIEW 2010!
What’s Farnell (element14) up to? And, semicon equipment bubble burst? Whoa!!
Bluetooth set as short range wireless standard for smart energy!
View 3D TV, without glasses, today!
Indian medical electronics equipment industry to grow at 17 percent CAGR over next five years: ISA
Top 10 electronics industry trends for 2011
TELECOMMUNICATIONS
LTE will see larger deployments, higher volumes than WiMAX!
LTE should benefit from WiMAX beachhead!
Context-aware traffic mediation software could help telcos manage data tsunami: Openwave
Mobile WiMAX deployment and migration/upgrade strategies
Upgrade to WiMAX 2 uncertain as TD-LTE gains in momentum!
Tejas celebrates 10 years with new products for 3G/BWA backhaul
Focus on gyroscopes for mobile phone apps: Yole
Bluetooth low energy should contribute to WSN via remote monitoring
INSIDE Contactless unveils SecuRead NFC solution for mobile handset market
How are femtocells enhancing CDMA networks?
Top 10 telecom industry trends for 2011
TECHNOLOGY
Symantec’s Internet threat security report on India has few surprises!
Epic — first ever web browser for India, from India!
Norton cybercrime report: Time to take back your Internet from cybercriminals!
NComputing bets big on desktop virtualization
Brocade launches VDX switches for virtualized, cloud-optimized data centers
It isn’t an easy job tracking so many different segments! 🙂 I will try and do better than this next year!
Best wishes for a very, very happy and prosperous 2011! 🙂
Strategic roadmap for electronics enabling energy efficient usage: Venkat Rajaraman, Su-Kam
Venkat Rajaraman.
I am very grateful to Venkat Rajaraman, CEO, Su-kam Power Systems Ltd, for sharing his thoughts, as well as those of Dr. Ajay Mathur, director general, Bureau of Energy Efficiency (BEE), presented at the India Semiconductor Association’s (ISA) conference titled ‘Electronics enabling Energy Efficiency E3’, in New Delhi.
However, if Thomas Alva Edison were alive today, he would be very happy! He would see that his invention in pretty much the same form. Of course, there are more generating stations, more transmission and distribution lines, but the technology is fundamentally the same.
This scenario is quite changing. Yesterday’s era was all about industrialization – more automation, less labor, etc. Also, the more energy you consume, the lesser it costs to produce. Energy was considered inexhaustible then. Now, there is a paradigm shift. It is all about energy conservation! We know that the energy cost is rising and the resources are finite.
So, these changes are not about simple energy efficient appliances, smart meters, renewables, etc. It requires a complete socio-economic and mindset change, and that’s the hard part of the problem.
Rajaraman added that there seem to be far too many stakeholders in energy efficiency implementations — financial Institutions, technologies solution providers, beneficiary industries, energy audit companies, measurement and verification systems, government/subsidy bodies, etc.
A plant owner is not attracted enough to make the investment in energy efficiency. There are questions such as who will own the results, who will deliver it, how will it be delivered? Herein lies the problem and the opportunity!
There have been several interventions from the BEE. They have been attacking this problem from policy perspective in a clinical precision manner. BEE has been doing a great job in coming out with policies that comprehensively covers such issues.
Rajaraman concluded that simple technological and policy interventions alone are not going to be enough. It needs a social and mindset change. He concluded: “Give a man one CFL/LED, you secure one CFL/LED worth of energy savings! Teach a man to love his CFL/LED, you inspire a life time of energy efficient behavior!”
Su-Kam has been doing simple interventions regarding energy efficiency – such as, replacing DG sets with inverters, LED lighting, etc.
I will later add a separate post on Dr. Ajay Mathur’s thoughts.
Growing Indian power electronics market provides host of opportunities
The India Power Electronics Market Report – 2010 has been developed by Dhaval Dalal and Ram Kumar, on behalf of Innovatech Switching Power India Pvt Ltd in Bangalore, India. I was delighted on being contacted by Ram Kumar, MD, who was kind enough to share some bits of this report.
The unprecedented growth in the Indian electronics demand (estimated at $50 billion for 2009), has spawned a corresponding spurt in the domestic power electronics industry. While this growth has been acknowledged in industry circles, no specific data exist to understand this phenomenon – this report aims to fulfill this gap.
The report highlights the peculiarities of Indian industry by identifying unique areas of growth which require special attention from industry participants. It also highlights the gap between the domestic demand and supply which is currently fulfilled by imports. Conversely, areas where the Indian industry contributes to the global demand by exporting products/services are also highlighted.
Coming from technology/strategic marketing background and with an unmatched access to the decision makers and trendsetters in Indian electronics industry, the authors are able to provide a highly credible and comprehensive account of the market that goes well beyond the surface data and helps identify actionable agenda for the reader.
So, here’s an opportunity for folks to enter the Indian power electronics segment, which offers a host of opportunities.
Some excerpts from the report are reproduced here. Read more…
ISA Vision Summit 2010: Karnataka Semicon Policy 2010 unveiled; great opportunity for India to show we mean business!
Karnataka Semicon Policy 2010 released at ISA Vision Summit 2010 by Hon’ble Chief Minister of Karnataka, B.S. Yeddyurappa and Hon’ble IT and BT Minister, Katta Subramanya Naidu, along with B.V. Naidu, chairman, ISA and other dignitaries.
The much awaited Karnataka Semicon Policy was released today at the ISA Vision Summit 2010 by the Hon’ble Chief Minister of Karnataka, B.S. Yeddyurappa and Hon’ble IT and BT Minister, Katta Subramanya Naidu, along with B.V. Naidu, chairman, ISA, and chairman and CEO, Sagitaur Ventures India Pvt Ltd, and other dignitaries.
Way back, on 25 July 2008, it was first mentioned that Karnataka could have its own semicon policy, as announced during the ISA ExCite event that day. The state semicon policy has taken own time coming — a little over 18 months!
Well, better late than never! The Indian state of Karnataka now has its own semiconductor poilcy, which was unveiled today at the ISA Vision Summit by the IT Department, Government of Karnataka, along with the ISA.
Karnataka’s target: $120 billion by 2020
Prior to the policy’s release, B.V. Naidu said: “The ISA welcomes the Karnataka Semicon Policy and we are happy that most of our recommendations to the government have been considered. This policy will play a significant role for achieving $120 billion electronic system design and manufacturing industry to grow in Karnataka.”
This means: of the national target of $400 billion by 2020 set by ISA for the Indian semiconductor industry, the Karnataka state is expected to achieve 30 percent!
Karnataka semicon policy features
Am very sure a lot of you are very keen to know about the policy! Presenting the salient features of the Karnataka Semicon Policy 2010.
Hon’ble Chief Minister of Karnataka, B.S. Yeddyurappa, highlights key points of the Karnataka Semicon Policy 2010.
* To encourage setting up of semiconductor units in tier-2 cities, other than Mysore, Mangalore, Hubli, an incentive of investment-promotion-subsidy would be provided in accordance with the Karnataka Industrial Policy 2009-2014.
* Govt. of Karnataka would provide additional amount of Rs. 25 crores, toward 26 percent contribution to the KITVEN (Karnataka IT venture capital fund) IT Fund for raising funds from the market to assist startup semiconductor units engaged in design and embedded software.
* Govt. of Karnataka would provide financial assistance to firms for filing IP in accordance with the incentives provided in the industrial policy.
* Govt. of Karnataka will provide assistance of 50 percent of the total cost toward purchase of proposed equipment for augmenting the Orchid Tech Space in the STPI to a Characterization Lab. The remaining funds would come from the industry or mobilized through PPP business model. This Lab will be a one-stop solution for hi-tech facilities and will spur growth of R&D in future technology without financial burden to budding entrepreneurs.
* ATMP units will be encouraged with special incentives in the proposed ITIR near BIAL (Bangalore International Airport), Bangalore. (Special incentives for ITIR to be announced separately).
* Govt. of Karnataka would provide all encouragement and assistance to the solar PV manufacturing units under the Karnataka Renewable Energy Policy.
* To encourage setting up of ATMPs in the state, Govt. of Karnataka would provide incentives to units set up in the state by lowering the threshold investments for ATMPs/ecosystem units with investments above Rs. 400 crores and up to Rs. 1,000 crores. Incentives would be provided on a case-to-case basis approach based on specific employment potential.
* As a policy support, to encourage innovation and R&D in chip design, product development, telecom, etc., the Govt. will set up a fund known as ‘Karnataka Fund for Semiconductor Excellence’ of Rs. 10 crores. This fund will be available to the private companies covering up to 50 percent of their R&D expenses, subject to a limit of Rs. 10 lakhs per unit. This financial assistance would be subject to repayment of 10 percent of the profit (after tax) annually for a period of 10 years. Preference would be given to fresh engineering graduates by identifying talent through projects submitted in the college and start-up companies.
* A committe comprising of representatives of VTU, ISA, industry, scientists, and financial institutions would be set up to monitor the activities and functioning of the fund.
* Karnataka Power Corp. and Karnataka Renewable Energy Development Ltd would take steps to develop solar farms on joint ventures/PPP mode in Bijapur, Gulbarga, Raichur and Bellary districts.
* Govt. to set up a focused school under IIIT at a cost of Rs. 10 crores and strengthen the research labs in the institute at a cost of Rs. 5 crores with a contribution of 25 percent from the industry.
* Fiscal incentives would be provided to semiconductor units as per the Karnataka Industrial Policy 2009-2014.
— Investment promotion subsidy.
— Exemption from stamp duty to MSME, large and mega projects.
— Concessional registration charges to MSME, large and mega projects.
— Waiver off conversion fine to MSME, large and mega projects.
— Exemption from entry tax to MSME, large and mega projects.
— Incentives for export oriented enterprises for MSME, large and mega projects.
— Subsidy for setting up ETPs to MSME, large and mega projects.
— Interest free loans on VAT to large and mega projects.
— Anchor units subsidy to first two manufacturing enterprises with minimum employment of 100 members and a minimum investment of Rs. 50 crores.
— Special incentives for enterprises coming up in low HDI districts for large and mega projects.
— Interest subsidy to micro manufacturing enterprises.
— Exemption from electricity duty to micro and small manufacturing enterprises.
— Technology upgradation, quality certification and patent registration for micro and small manufacturing enterprises.
— Water harvesting/slash conservation measures to small and medium manufacturing enterprises in all zones.
— Energy conservation, small and medium manufacturing enterprises in all zones.
— Additional incentives to the enterprises following reservation policy of the state.
— Refund of cost incurred for preparation of project report for micro and small manufacturing enterprises.
Now, let’s take a look at what the Karnataka Semicon Policy 2010 achieved and areas that need clarity! Read more…
2009 ending with lot of positives for global semiconductor industry
Friends, I’ve been receiving lot of information lately regarding the state of the global semiconductor industry. Let me share some of those with you, here.
First, from my favorite, IC Insights. It said recently that after the slump of 2009, the electronics systems sales is likely to set new sales record in 2011!
Following the worst economic recession in over six decades, global sales of electronics systems are projected to fall 11 percent in 2009 to $1.11 trillion from a record-high $1.24 trillion in 2008, according to the just-released 2010 edition of IC Insights’ Integrated Circuit Market Drivers report. This year’s drop is only the third annual decline in the history of electronics systems sales — following 2001 and 2002.
According to IC Insights, the electronics equipment market is forecast to rebound in 2010 with the total value of systems shipments growing 7 percent to $1.19 trillion. Another 9 percent increase in systems sales is expected in 2011, which will push global electronics equipment revenues to a new record-high $1.29 trillion. IC Insights sees 2010 recovery year being led by 9 percent rise in revenues for communications systems and automotive electronics.
Top six NAND flash memory suppliers: iSuppli
Next, from iSuppli, another one of my favorites. It reported that following a strong performance in the global NAND flash memory market in Q309, Japan’s Toshiba Corp. led the way with its revenue improving by nearly 50 percent during the period. Wonderful!
Incidentally, the global NAND flash memory revenue in Q3 rose to $3.94 billion, up 25.5 percent from $3.1 billion during Q2. That’s excellent! You can see the iSuppli table on the top six NAND flash memory suppliers here.
Here’s another one — from SEMI, which recently reported that the global semiconductor manufacturing equipment billings had reached $4.54 billion during Q309. This figure is 69 percent higher than the second quarter of 2009, but 31 percent less than the same quarter a year ago. Nevertheless, this news is also encouraging!
Top 10 Worldwide Semiconductor Vendors, Preliminary Ranking by Estimated Revenue (Millions of US Dollars): Gartner
Also, Gartner reported that global semicon revenue had declined $29 billion in 2009, with revenue totaling $226 billion in 2009, an 11.4 percent decline from 2008. Now, this is expected, given the tough year we have had. Here are Gartner’s top 10 global semicon vendors.
I have another release, this one from the venture capitalists (VC) community — the Venture View 2010, the annual predictions survey conducted by the National Venture Capital Association (NVCA).
Clean technology is likely to be industry where most VCs predict growth with 54 percent forecasting higher investment levels in 2010. Other favorable industries include Internet (46 percent predicting higher investment levels), Media and Entertainment (33 percent) and Software (32 percent).
The semiconductor industry is the sector in which most VCs believe we’ll see a decrease next year. Sixty-four percent predict lower investment levels in 2010.
Many venture capitalists believe that the wireless sector will experience declines with 37 percent predicting lower levels for next year as well.
Well, I don’t quite agree!
Especially, with regard to semiconductor and wireless. However, it is evident that VCs are looking at segments where they can get returns much faster, and that’s quite understandable.
Finally, borrowing a quote from Future Horizons’ Malcolm Penn from last month, where he said, “We now see the market declining only 10 percent over 2008, a truly remarkable recovery considering the abyss we were staring into just this time last year.”
So true! Who would have imagined such positive news, as above, to have come out during the end of 2009 — by far, the worst year in this decade for the global semiconductor industry. Still, the VCs don’t want to invest here? Why? Perhaps, they have either miscalculated or did not expect the recovery to be as swift as it has been so far!
The year is ending with a lot of positives for the global semiconductor industry. Let’s hope for a strong performance in 2010. I leave it to all of the pessimists to keep searching for negatives! In the meantime, I will bask in the glory of all the positives signs currently emanating from the global semiconductor industry.
Pradeep Chakraborty 