Where is Indian semiconductor industry headed?

It has been a pretty disappointing year for me, so far, owing to one or another family related problems. I’ve only flattered, to deceive, as one would put it! Not that I’m out of my troubles, but am sure I can ‘play my game as usual’, hopefully, without any further disruptions.

First, I have been closely following the global semiconductor industry, despite my troubles, and there’s really nothing new worth reporting, at least, so far!  Hope the next month and the rest of the year are better! But first, my take on the Indian semiconductor industry, which has now started to disappoint! At least, yours truly!

Last July, I had done a post, where, Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli, (now IHS iSuppli) had said to a question on the need for a foundry for the Indian semiconductor industry that: “If there is a foundry built in India, it will have to start at mature technology, which they will have to underprice just to get business. Financially, this makes no sense for any investor, except for the government, which can protect the foundry (their investment) through tariffs.”

It is going to be a year since the remark was made!

This February, at the ISA Vision Summit, one heard  a well known personality voice concern that the manufacturing sector suffers from a confidence deficit. A part of the software successes have been due to a brand developed. He said: “We have the advantage of a great brand, and need to make use of it in the electronics manufacturing sector. The government recognizes the need to convert Indian into a global destination.”

Where is the recognition to help create Indian into a global destination happening? Does it really take so long to develop a semicon policy in the first place? It is strange that perhaps, six and a half years since it was set up (Oct. 30, 2004), the ISA has still not found any takers for a fab in India!

Elsewhere, I mentioned that the latest ISA-Frost report on the status of the Indian semiconductor industry does not sound accurate! I don’t have anything personal against the Indian arms of MNCs, but why are they made even part of the report? I don’t recall seeing a similar report from China or Japan or Taiwan, that does a similar thing!

Where are the Indian semiconductor companies in the first place? One of India’s major semicon firms, the Srini Rajam-led Ittiam Systems, recorded a growth of Rs. 52 crore in 2010, while another significant ODM player, SFO Technologies from Kochi, Kerala, was said to be achieving Rs. 750-800 crore in 2010. What about the other Indian companies? To be accurate: what’s even happening with the Karnataka Semicon Policy? And, don’t some of the other Indian states deserve similar policies?

There are certain things that the Indian semicon industry needs to do, unless it wants to be written out of reckoning in the global context.
1) Focus on the needs of the Indian semicon companies only!
2) Prepare industry reports that highlight the capabilities of Indian semicon firms only; it does not matter how small those firms are! At least, we will have correct reports presenting the right picture.
3) I mentioned 10 points the Indian semicon industry needs to focus on in a post “Long wait for Indian semicon industry?” Perhaps, some, if not all, need to be paid attention to!

I am also told that the ISA president, Ms Poornima Shenoy is leaving, to start a new business. My best wishes to her for a successful career!

Renesas Mobile inaugurates R&D centre in Bangalore

Renesas Mobile Corp., a wholly-owned subsidiary of Renesas Electronics Corp., announced the inauguration of its research and development (R&D) centre in Bangalore, India which develops 2G, 3G and 4G modem technologies.

(L-R): Heikki Tenhunen, senior VP, Alan Frederiksen, MD, Renesas Mobile India, Shinichi Yoshioka, senior executive VP and COO, and Jean-Marie Rolland, CTO and executive VP, Sales and Marketing.

Renesas Mobile was established on December 1, 2010 as a 100 percent subsidiary company of Renesas Electronics. As part of the Renesas group, it has the support of the world’s largest embedded microcontroller player in the semiconductor world. Renesas Mobile focuses on platforms for smart phones, feature phones, car infotainment and embedded connected devices enabling people to stay connected in the cloud computing era.

The company integrates the former Mobile Multimedia Business Unit of Renesas with the former Nokia Wireless Modem Business Unit. The Nokia Wireless Modem Business Unit has been acquired by Renesas Electronics as announced on July 1st, 2010.

Introducing Renesas Mobile Corp., Heikki Tenhunen, senior VP, said that Renesas Mobile offers advanced and innovative products and services for mobile phones, car infotainment solutions, consumer electronics and industrial applications.

The company’s mission is to develop, productize and deliver advanced triple- and dual-mode communication centric semicon chipsets and platforms based on chipsets to provide innovative solutions and drive mew oppurtunities for customers. Renesas Mobile aims to be a world leader in mobile platforms by evolving its proven modem, application processor and SoCs, and associated services via its global business channel.

The Renesas-Nokia combine has since gone on to make unrivalled connected experiences a reality — by way of powerful multi-tasking, rich multimedia, newly emerging technologies — such as cloud computing, 3D, augmented reality, etc., PC like Internet experience, smaller form factor and longer battery life, and remain always connected!

Renesas’ mobile expertise includes the following:
* Excellent device experience, supporting over 400 mobile handsets to date;
* Key components verified at ‘system‘ level quality for platform release;
* Complete reference design easy to start application development;
* Market proven multimedia software package and multiple OpenOS integration support;
* Competitive SoC implementation performance; over 470 mn transistors in mobile LSI (G4);
* Leading-edge process (45nm, 28nm, 22nm) balancing own fab and partners (TSMC, etc.).

Indian semicon market update shows 28.3 percent growth in 2010!

I am a bit amused to read the latest key findings on the Indian semiconductor market from ISA-Frost & Sullivan. Never mind!

Source: ISA-Frost

The report concludes that products demonstrating potential for explosive growth include –mobile devices, telecom base stations, LCD TV, STB, EMS, CFL, LED lights and smart cards and products with low MI – notebooks, tablets, STBs routers, digital cameras, etc. need to be given preferential treatment for indigenous manufacturing.

India is becoming the hub for small car manufacturing. Incentives and encouragement need to be provided for enhancing automotive component manufacturing in the country to keep pace with automobile industry growth.

Products enabling energy efficiency need to be incentivized through tax breaks for R&D and product development thereby promoting indigenous manufacturing. Electronics and semiconductor MI stagnate at 50 percent;  the TAM growth is unlikely to match the TM growth in the near future! Continuing status quo — the electronics import bill to surpass crude import bill by 2020-21.

The need of the hour is a focused mission for local electronics manufacturing promotion. A National Electronics Development Plan is also required. As is required an electronics policy for ecosystem development; subsidies for manufacturing; funds for R&D; extended tax breaks; hardware development parks.

Otherwise, the report suggests that India’s semiconductor market grew by a phenomenal 28.3 percent in 2010.

Indian semicon market: Source: ISA-Frost

The global semiconductor market’s cyclical trends has minimal impact on India. Mobile devices, telecom and IT/ OA contributed 82 percent to semiconductor TM in 2010.

Local manufacturing of telecom equipment by OEMs and EMS companies to propel related semiconductor consumption by a massive 50 percent during 2010 to 2012. Influenced by regulatory norms and sharpening competition, automotive segment to account for the highest growth in semiconductor demand at 31 percent from 2010 to 2012.

Sustained gulf between the semiconductor TM and TAM from 2010-2012 highlight the urgency to promote local manufacturing to drive higher growth in TAM.

The Total Semiconductor Market (TM) revenues are poised to grow from $6.55 billion in 2010to $9.86 billion in 2012. The market is expected to witness a CAGR of 22.7 percent.

During the corresponding period, the Total Semiconductor Available Market (TAM) revenues are expected to grow at a CAGR of 22.3 percent reaching revenues of $4.71 billion in 2012from $3.14 billion in 2010. Mobile devices and telecom are the key contributors to TAM while mobile devices and IT/ OA are the key contributors to TM.

Being an indispensable component in a wide range of products, the memory market leads the contribution to semiconductor revenues with 23.4 percent and 20.1 percent of TM and TAM, respectively.

One hopes that all of this is indeed correct, and the Indian semiconductor industry continues to grow in future!

Yet another plan for semicon fabs in India?

Interesting! I am a bit surprised to read the news item that India is planning to build its own commercial semiconductor fabs, worth Rs. 25,000 crores or $5 billion.

One of the lines in the release by the PIB, Government of India, states that the electronics hardware sector is capital intensive and facing several disabilities and barriers Therefore, the proposal will have significant impact in resolving these issues and help Indian electronics hardware industry to develop localized content/value addition.

Hasn’t this line been repeated time and again? And, what has been the result? Let’s hope that India does not forget the mistakes committed during the initial semicon policy or SIPS.

Coming back to the PIB release, it is stated that the Empowered Committee shall submit its recommendations to the Government by 31.7.2011.  Why does the Committee need so much time? Hasn’t pages and pages been written about India’s semicon policy? I wonder whether folks have even looked into all of this properly!

Next, the timing itself! In a post last April, I had mentioned that  the Indian semiconductor policy, which was announced back in 2007, had supposedly expired on March 31, 2010! What have the so-called industry caretakers been doing up until now? One does not plan to release a revised policy more than a year post its expiry! It should be immediate!!

It was also proposed to extend the deadline of India’s semicon policy up to March 2015! Whatever happened to that?

Where will the proposed semiconductor fab or fabs be set up? At FabCity in Hyderabad? I don’t think so!

One good thing to come out of all this — there is still some hope for having a fab in India. I am using the word ‘hope’ as there are many, including myself, who feel that all of this is perhaps, a wee bit late call!

As of now, India could possibly look globally for any fab or fabs to buy out! It simply does not have the time to build one!  By the time this Committee comes out with its responses by end July 2011, it will be too late. Here’s why!

Let’s say that some folks could actually invest money to build a fab. This will be followed by trying to find a land, and then, possible investors. By the time all of this happens, it will be a good 12-18 months, or possibly, 2013. Next, what’s going to be the nature of the fab that India builds? Is it 200nm, or 300nm, or 28nm? How much would a state-of-the-art fab actually cost? Has any study been done of where the global industry would be by the time a semicon fab start in India?

These, and many more such questions need to answered.

'Long wait' for Indian semiconductor industry?

I still don’t quite understand the submission made by the IT Taskforce on recommendations for the Indian hardware and electronics manufacturing! The first proposal was submitted by this Taskforce, back in Nov. 2009! Now, a leading daily comes out with a report about a new prescription to boost electronics manufacturing. What is all this?

By itself, isn’t this a ‘long wait’ for the Indian semiconductor and electronics industries?

I repeat: Have we really done enough, even in  the past, to even boost electronics hardware manufacturing in the country? If yes, then where are the mini Hsinchus and Shenzhens within India? N. Vittal had said something similar (such as developing mini Hong Kongs and Singapores) some years ago, but that seems ages ago, now!

Back in April 2010, I had written a post titled: Did you know that the Indian semicon policy had expired and now requires an extension? The next thing one heard was in July 2010: Indian industry proposes to extend deadline of India’s semicon policy up to March 2015!

What is really happening with the Indian semiconductor industry? First up, the semiconductor indusrty is NOT the IT industry. However, it appears that it is being treated like one!

Did anyone really look into the reason why fabs never happened in round 1 of the SIPS? Perhaps, not! I had asked a question, back in Feb. 2009: The Indian silicon wafer fab story seems dead and buried. Should we revive it?

Lest I be repetitive, and boring, I had suggested a 10-point program for the Karnataka semicon policy — in another blog post — on June 29, 2008. The points were:

1. A long-term semiconductor policy running 20-25 years or so.
2. Core team of top Indian leaders from Indian firms and MNCs, as well as technology institutes in Karnataka to oversee policy implementation.
3. Incentives such as government support, including stake in investments, and tax holidays.
4. Strong infrastructure availability and management.
5. Focus on having solar/PV fabs in the state.
6. Consider having 150/180/200mm fabs that tackle local problems via indigenous applications.
7. Develop companies in the assembly testing, verification and packaging (ATMP) space.
8. Attract companies in fields such as RFID, to address local problems and develop local applications.
9. Pursue companies in PDP, OLED/LED space to set up manufacturing units.
10. Promote and set up more fabless units.

All that one needs to do is to simply extend this all across India, rather than waste time in devising policies that have either expired, or well, take ages to see the light of the day! We should also refrain from discussing wafer fabs for now, and focus on fabless. Although, if we do attract and develop a local fab, that would be great for India!

Wonder, whether anyone in India is even listening!

Study on semiconductor design, embedded software and services industry in India

The India Semiconductor Association (ISA) has released a study on semiconductor design, embedded software and services industry, along with Ernst & Young.

According to the report, the key challenges constraining the growth of the semiconductor design industry are summarized under five major issues:
i) Quality, availability and maturity of talent.
ii) Absence of a startup and SME ecosystem.
iii) Lack of a semiconductor ecosystem.
iv) Lack of adequate infrastructure, policies and implementable incentives.
v) External issues such as competition from Asian countries and protectionist policies by some countries.

The report then goes on to tackle each one of these issues in detail under elaborate recommendations.

These recommendations require the concerted and co-ordinated efforts by the government, industry and academia to aid India reach the next level of growth and achieve the specific goals envisaged for the industry. The goals are:

Goal 1: Maintain leadership in semiconductor design by incubating 50 fabless semiconductor companies, each with the potential to grow to $200 million in annual revenues by 2020.

Goal 2: Build on India’s favorable intellectual property protection image and make it among the top 5 destinations for intellectual property creation in the semiconductor design industry.

Goal 3: Capitalize on indigenous demand in strategic sectors to provide impetus to the Indian fabless semiconductor industry.

Goal 4: Sustain and nurture high-class semiconductor design manpower at a growth rate of 20 percent year-on-year to double its current output levels to reach a workforce size of 400,000 in the next five years.

The very first goal itself is a bit far fetched, but not that it can’t be achieved. To reach anywhere close to this goal, a concerted all round effort would be required from all in the industry. The fourth goal would have been better as the first goal, but never mind.

The second goal looks fine, but it is the third goal that seems a bit far off. This is April 2011, and still, there are talks about capitalizing on the indigenous demand in strategic sectors in order to provide impetus to the Indian fabless semiconductor industry?

I recall a discussion in mid-2005 where an industry expert mentioned that fabless was the way forward for the Indian industry! Between then and now, fabs were supposed to come up, but they failed. Nevertheless, one must not give up hope!

Indian semicon industry poised at very interesting juncture: Dr. Pradip Dutta, Synopsys

Dr. Pradip Dutta, corporate VP of Synopsys Inc. and MD of Synopsys (India).

I have known Dr Pradip Dutta, corporate VP of Synopsys Inc. and MD of Synopsys (India), as well as vice chairman, India Semiconductor Association (ISA), and now, chairman designate for 2011, ISA, for close to a decade now. We recently got into an interesting discussion on the Indian semiconductor industry.

Growth of semicon and electronics in India
First, I asked what should be done about the growth of semiconductors and electronics in the Indian eco-system?

Dr. Dutta said: “My view on this subject has been the same for many years now; high-tech electronics has to be a national mission. The defense and the government labs played a major role in promoting this sector in the US; e.g. Sandia National Laboratory, Lawrence Livermore Laboratory, Jet Propulsion Laboratory, NASA etc. DARPA, which is part of US Department of Defense has sponsored phenomenal amount of research in semiconductors and electronics.

“If we now look at countries closer to our part of the world, in Asia, we will see a similar focused effort from the governments. The STARC initiative in Japan, the National SOC program in Taiwan, the 839 program in Korea, the 863 program of Ministry of Science and Technology in China, all catered to a flourishing investment in R&D and innovation in high tech. Our country is poised for it too. We need to encourage start-ups in fabless design, explore manufacturing, foster innovation, create favorable policies for the industry and most certainly develop the talent pool.”

Need for domestic manufacturing
There is a need for domestic manufacturing in high tech electronics. Where are the Indian companies going? According to him, domestic manufacturing in high tech electronics has been flagged as a critical area in the ESDM (Electronic Design and Manufacturing) report that was submitted to the government by the industry in 2010. There is a need for initial funding, both in R&D as well as manufacturing. Duty structures need to be rationalized between import of CBU, SKD, CKD and components.

He added: “We have seen that manufacturing prospers in cluster environment and hence there is a recommendation to promote manufacturing clusters for specific product categories. However, it is safe to say that we have long ways to go in this area.”

Co-operation with international trade bodies
Now, what is the required policy framework and co-operation with international trade bodies?  As per Dr. Dutta, the ISA has been active in forging close working relationships with multiple trade bodies from various parts of the world. “We have signed several MoUs with entities such as HTIA (Israel), ASTSA (Japan), DSP Valley (Belgium), TSIA (Taiwan), Semi (USA), GSA (USA) and UKTI (UK).

“Of course, we need to have a focus and these relationships should be driven by strategy. We have carried several delegations to these countries and hosted bi-lateral visits as well. These visits provide an opportunity for our member companies to have direct B2B opportunities.

“We learn valuable best practices from other entities and try and implement in our environment. For example, Israel does a great job in taking innovative ideas from entrepreneurs to incubation, many times inside of universities, and then spinning them into companies which later become part of the global value chain. In the process, this small country has created at least 150 NASDAQ listed high tech firms. Innovation to incubation to wealth creation – a formula that works very well there. We could certainly learn a lot from that model.”

Future of Indian semicon industry
So, how does Dr. Pradip Dutta see the Indian semicon industry, going forward? He said: “The Indian semiconductor industry is now poised at a very interesting juncture. While the MNCs are designing chips at the bleeding edge, we see a lot of high quality work being done by the design service companies and also local start-ups. Incidentally, the start-up scenario is quite active in the system space. This ties in with the ESDM focus of our industry. 

SFO – India's leading ODM player!

Thanks to Soni Saran Singh, executive director, NMTronics India Pvt Ltd, I was able to attend a ‘Global Supplier Meet’ at The NeST Group, Kochi, who’s flagship company, SFO Technologies is India’s number 1 ODM player.

I first heard of the NeST group when I was last in Kochi, covering the Photonics event organized by Cochin University of Science & Technology. Today, I had a full introduction! The NeST group started operations in 1991. Now, it is a $220 million dollar company, and well, India’s premier ODM player!

More later 😉

ST focuses on four key growth areas

Carlo Bozotti, president and CEO, STMicroelectronics.

According to Carlo Bozotti, president and CEO of STMicroelectronics, there are four key growth areas for the company:
* Smart meters and energy saving.
* Smart consumer devices.
* Trust and data security.
* Healthcare and well being.

Bozotti was speaking at the STMicroelectronics’ media roundtable held this evening at the Greater Noida, India office.

Year 2010 goes down in ST’s history as a year of records. Both ACCI and IMS surpassed the $1 billion mark in quarterly revenue. Year 2010 was also a year of recovery — with ST achieving $1,3 billion revenue and a net operational cashflow of $961 million. ST also improved its net financial position to $1.7 billion.

In 2011, ST promises to expand and continue to grow its customer base. This year, ST predicts that the global semicon industry will grow 5-8 percent.

ST forsees its second major block of growth in manufacturing. It has aggressive ramp-up planned in application areas, such as:
* MEMS.
* Smart power automotive field.
* New platforms and solutions in smartphones and tablets.

Even ST-Ericsson, which was in restructuring mode, is now secure. This year, said Bozotti, it will be a year of transition from old, legacy products to new.

The last priority is to achieve 3D SoCs, complex MCUs and twin MEMS. Bozotti noted that the company plans to combine accelerometer and gyroscope in a single application. It will also add innovative solutions to smartphones and tablets.

As for R&D, Bozotti claimed that the company will remain committed. “We strongly commit to R&D in both good and bad times,” he noted.

Innovation enables every milestone at Ittiam!

I first met Srini Rajam, chairman and CEO, Ittiam Systems, back in 2002-03 — a time when I’d just returned from Hong Kong and Singapore, having finished my first stint with Global Sources, and was still with Reed Elsevier (EDN Asia).

Today, I am proud to report a huge milestone in Ittiam’s journey — the company has completed a decade’s existence, and still remains India’s leading semiconductor company!

Technology for people
Today, Ittiam celebrated its journey of a decade and beyond! Speaking about technology for people, Rajam said, “Our technology has reached farther than we imagined!”

From the use of audio, video and communications in flight, train and car, it has moved on to personal communication, tablets and enterprise.As an example, it has gone beyond from beginner’s recording to home recording on to professional recording.

Ittiam IP is everywhere!

Do note that all of this hasn’t really been about fun and leisure only! For instance, Ittiam’s solutions have made their way into head mounted display for industrial applications, DVR unit for surveillance recording, IPTV encoding for broadcast head end, and WLAN SoC for automotive application.

Over the years, Ittiam has gained recognition as a key technology player. Today, it boasts of one of the widest range of technologies for embedded systems development (see figure).

Ittiam has gained a lot of headway in IP and system design, and chip design IP. Currently, it boasts of 45 patent filings and 28 patent grants.

IP business model
On the IP side of things, Ittiam has emerged as the model IP pioneer for India! Ittiam pioneered the IP licensing model from India. Ittiam retains the IP rights and shares the market risk with customers. Rajam added: “Royalty is like pricing a cricket bat on runs scored. The star players drive your success!”

He added that Ittiam had managed to touch the ‘sweet spot’ in terms of IP royalty in the range of 30-40 percent. There has been a steady growth in Ittiam’s royalty share of revenue, and is forecast at 25 percent as of 2010-11 estimates. Sustained growth in design wins has led to a situation from the year ending March 2004 revenue $4.8 million or Rs. 22 crores to year ending March 2010 with a revenue of $11.5M or Rs. 52 crores. From 2004-10, it witnessed six years of 15.7 percent CAGR.

From starting its India headquarter in Jan. 2001 and the US subsidiary in Feb. 2001, Ittiam has since gone on to open a France (Europe) subsidiary in Jun. 2007, and a Japanese branch office in June 2009, righ up to Singapore — where it set up the Asia subsidiary in Aug. 2010.

The next convergence!
Ittiam has set its sight on the new home for the best of multimedia and communication. The smartphone is now the next PC for convergence. Around 6 million mobile phones and tablets are likely to be shipped in 2010-11 with Ittiam’s HD video.These would be 720p HD video record and playback devices on SoC devices rated only for SD resolution.

Ittiam says that it has a lot to offer for smartphones and tablets in the coming year. The future is said to be powered by twin engines for industrial electronics and mobile communications. Industrial electronics should see complete applications and systems, while smartphones and tablets will likely witness a 3X growth over the next three years of OEM units with Ittiam IP.

All the best wishes to Ittiam in the new year, and the years ahead!