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.

Disruptions to global electronics supply chain following Japan's quake!

The IHS iSuppli held a seminar to discuss “How Big of a Threat to the Global Recovery and Key Industries Is the Disaster in Japan and the Turmoil in the Middle East and North Africa?”.

One of the participants, Dale Ford, senior VP, IHS iSuppli, presented on the “Disruptions to the electronics supply chain”, following Japan’s quake, where he pointed out that those companies close to the epicenter of the earthquake would need as much as four to six months to return to normalcy!

Ford listed equipment and building damage, infrastructure damage, electricity, water and roads, as well as workforce disruption, and safety, food and gas as the areas mainly impacted.

The time for full shipment restoration ranges from one to two months, on to four to six months for the areas impacted most, especially, equipment and building damage.

Now, it is well known that Japan plays a major role in the global electronics supply chain. Japan offers 20.8 percent of global production. It supplies 60 percent of the worldwide silicon wafers. Its TFT LCD panel capacity equals 12 percent of the world supply. It is also said to be a leader in battery technology and production.

The key component and material production facilities currently closed in Japan include:

Silicon production
a) Kamisu, Ibaraki, Shin-Etsu
b) Nishigo, Fukushima, Shin-Etsu
c) Utsunomiya, Tochigi, MEMC
d) Yonezawa, Yamagata, SUMCO

Display manufacturing
a) Hitachi Displays
b) Panasonic LCD
c) Tohoku Pioneer

Semiconductors
a) Aizu Wakamatsu, Fukushima
On Semiconductor (Logic)
Fujitsu (Analog, Discrete, Memory)
Texas Instruments (Analog, Optical)

b) Atsugi, Kanagawa
Mitsumi (Analog, Logic)

c) Goshogawara, Aomori
Renesas Electronics (Logic)

Impact of Japan's quake and tsunami on global semiconductor industry

It has not even been a week since the unwanted happenings in Japan. Already. there are reports of nuclear emergency! One hopes it does not turn out to be that way!!

On the semiconductor front, DRAMeXchange of Taiwan has reported that Japan’s earthquake and electrical brownouts could affect silicon wafer supply and global DRAM capacity. WitsView reported that the recovery process of infrastructure in Japan will affect the resurgence of upstream panel supply chain. LEDinside observed that the earthquake generally has not done much damage to the LED industry.

EnergyTrend reported that the earthquake in Japan has relatively slight impact on the global solar industry compared to the other industries. The supply chain sectors influenced are mainly mono silicon and poly silicon suppliers. However, it has sent out a warning: the nuclear crisis in Fukushima continues to appear unsettling. If the radiation leakage widens to Kanzai of Japan, where many solar cell manufacturers are located, the global supply of solar cells may be affected.

The more important impact may be on Japan’s production of components for LCD panels, says IHS iSuppli.

The Japanese earthquake and tsunami has also stunned the global semiconductor industry, given that Japan has been a pioneer and leader in the global chip industry.

The preliminary assessment of Texas Instruments’ manufacturing sites in Japan revealed that the fab in Miho suffered substantial damage during the earthquake. Teams are working to reinstate production in stages, reaching full production in mid-July. TI’s fab in Aizu-wakamatsu was also damaged, but already is being re-started with full production estimated by mid-April. TI’s third fab in Hiji is undamaged and running at normal capacity.

Sony Group Operations are said to have been affected by the Pacific coast of Tohoku earthquake, tsunami and related power outages. For Elpida, the Hiroshima Plant suffered little impact as it is located in Hiroshima in the southwest of Japan, However, the Akita Elpida memory plant is not in operation as of the time of the  announcement due to power shut down caused by the earthquake, and it is hoped that normal business will resume when the power returns.

Iwate Toshiba Electronics did not report any casualties, but as of March 15, there was power lost, with limited partial recovery to start from March 13. One hopes, some power has been restored. And, as of March 15, 12:00pm, seven factories out of 22 of the Renesas Group’s factories in Japan have temporarily shutt down production.

The Shin-Etsu group reported that as of 1pm,, March 15 (Japan Time), necessary inspections were being carried out at Shin-Etsu Chemical Kashima Plant (Kamisu, Ibaraki Pref.) and Shin-Etsu Handotai Shirakawa Plant (Nishigo Village, Fukushima Pref.), both of which were out of operation.

It is implementing inspections of the facilities and equipments at the both plants putting the utmost priority on safety. However, damages were founded at some production equipment at the both plants until now. At present, it is still unclear how long it will take to restore such damaged equipments and facilities at the both plants.

Mitsui Chemicals Group reports the following effects of the Kanto-Tohoku earthquake on its operations.Operations at the Kashima Works (Kamisu City, Ibaraki Prefecture), has been suspended since the earthquake. Operations will be resumed after assessment of damage by the earthquake and tsunami.

At its Ichihara Works (Ichihara, Chiba Prefecture), production at ethylene plants is according to schedule. However, the operations at Mitsui DuPont Polychemicals and Chiba Phenol plants have been suspended since the earthquake. After assessing effect of scheduled “rolling” blackout, operations will be resumed.

At the Mobara Branch Factory (Mobara City, Chiba Prefecture), operations at acrylamide and paint toner binder resin plants have been suspended since the earthquake. After assessing effect of scheduled “rolling” blackout, operations will be resumed. All other facilities are operating according to schedule.

Japan has the enviable track record of bouncing back from adversity. Let’s all hope and pray for an encore!

Japanese quake and tsunami — too devastating to watch on TV!

I’m shocked — seeing the devastating images on TV from the Japanese earthquake and tsunami! The images on TV from Japan’s earthquake and tsunami are just too depressing! I am really worried for some of my friends from that part of the world! Shinpai da!!

Japan's earthquake and tsunami: Courtesy: STAR News, India.

It is being reported on TV that the quake has shifted the earth off Japanese coast by 8cm (or is it inches?). There are likely to be severe aftershocks. The official Japanese death toll is currently 801, with thousands missing. There are threats of a nuclear meltdown. Over 200,000 people have so far been evacuated from the area.

The natural disaster is unprecedented, says the Japanese prime minister. The earthquake has knocked out electric power to an estimated over 6 million homes. Sendai is among the worst affected areas.  There is widespread flooding and destruction in Natori city, Miyagi prefecture. There are concerns of fuel and food shortages in Japan as well.

NHK has been showing devastating images of the tsunami that has struck Japan post the earthquakes. Staffers at Fukushima Daichi plant are still working to lower the reactor temperatures. About 9,500 are said to be mising at Minamisanriku. The world is said to be already mobilizing to help victims of Friday’s 8.9-magnitude earthquake that unleashed a devastating tsunami on Japan, reports CNN.

According to IHS iSuppli, the Japanese DRAM manufacturing accounts for 10 percent of the global supply based on wafer production. The two major DRAM fabs in Japan, operated by US based-Micron and Japan’s Elpida, have not been directly affected, according to preliminary indications from IHS iSuppli contacts. Japanese companies, mainly Toshiba Corp., account for 35 percent of global NAND flash production in terms of revenue.

The more important impact may be on Japan’s production of components for LCD panels. Japan accounts for a very high share of components uses in LCD panels and LCD-based products, including glass, color filters, polarizers, cold cathode fluorescent lamps (CCFLs) and light-emitting diodes (LEDs).

I have contacted the few friends I have in Japan, one, an ex-Global Sources employee, and the rest from the Japanese semiconductor/electronics industry.  Hope all of  them are safe and sound. Hope to be back with more!

PS: I just heard from my friend, Yoshio Washizu. An ex-Global Sources colleague, he lives in southern Japan, in Kyushu Island, and is not affected by the monster earthquake.

He says: “What happened in the eastern Japan is simply unreal. I have to go to Tokyo later this week and stay there until Sunday, I am not so keen on doing so, though. The earthquake badly shook Tokyo as well. And it is forecasted there is a 50 percent chance of us having the aftermath in the next five days. So I’m a little bit uncomfortable.”

Stay safe, my friend!

Clearly, mixed signals in OEM semiconductor design activities!

Friends, here is the full report on iSuppli’s recent activity titled “Mixed Signals in OEM Design Activities”.

Min-Sun Moon, senior analyst, Semiconductor Spend and Design, iSuppli, discussed how the “values” of design activities are discerned globally and how design decisions are made by a given country.

This report should be of particular interest to the Indian semiconductor design industry as it is apparent there is considerable scope for growth and development.

It is very well documented that everyone has been hit hard by the economic downturn. The electronic OEMs are no exception. They have also reduced shipments. The average selling prices (ASPs) of semiconductor devices have dropped dramatically as well.

Top six design influencing countries
As per iSuppli’s Design Activity Tool, the top six countries leading in the design influence are as follow: USA, Japan, China/Hong Kong, Taiwan, South Korea and Germany. The United States retains the no. 1 position, followed by Japan and China.

The dramatic changes in ASPs of chips and products meant an almost about 5 percent drop in semiconductor spend in 2008, and above 21 percent drop in semiconductor spend by the top OEMs in 2009. Hence, design activities by top OEMs dropped significantly.

The USA apparently has been going through a tough period, and it does not seem to have a bright future in 2009-10 due to drop in design spends. However, in 2010, it should post about 9-10 percent growth. The top design influencers in the USA include HP, Dell, Apple and Motorola.

China seizes opportunity
According to Moon, Japan retained the second position. However, China has seized the opportunity during the recession. It has some growth compared to other countries who have had negative growth this year.

China still remains one of the most attractive markets for OEMs to enter. Many top OEM have either opened or expanded R&D centers in China in the last few years.

However, because of the recession, the expansion by OEMs slowed down in China during 2009. Nevertheless, the Chinese market continues to grow. In the next few years, China will grow and the other countries will have some positive growth as well, but their growth will be slower than that of China.

China has also been showing interesting signs. Some Chinese companies are trying to enter new markets, such as automotive.

China is currently the third largest country in terms of design influence. The design share is about 10 percent in 2009. China could get close to Japan and the USA, but it will not happen in the near future though.

Top five countries in 2009
In 2009, the top five countries by design influence spend share are as follows: USA — 31 percent, Japan — 25 percent, China/Hong Kong — 10 percent, Taiwan — 8 percent, South Korea — 7 percent, and the Rest of the World — 19 percent.

Mixed signals are apparent in the design activities by country. For instance, this year, the USA has been losing market share. A large percent of design activities are moving to the Asia Pacific region. Some business in the USA is being continued or reduced — and being moved to other regions — in order to maintain the business and lower the cost of operations.

Japan’s design spend share increased from 22 percent (approximately $40 bn in 2008) to 25 percent in 2009. Japan is bringing a lot of design activities back home.

Taiwan used to be third largest in the design influence, but has now dropped to the fourth position, with share in design spend reaching 8 percent in 2009. China also contributed to the changes here. However, it is still better than others as some OEMs are still outsourcing to some ODMs located in Taiwan.

Identifying targets by regions
iSuppli gave examples of designing with sensors and actuators, and LEDs, as these are very popular currently.

According to Moon, designs using sensors and actuators have been more than 30 percent in the USA, while Japan has more than 25 percent. It is over 20 percent in Europe, while such designs have been less in Asia Pacific — above 15 percent.

The biggest influencers for sensors and actuators in the USA are said to be Apple, HP and TRW Automotive.

For LEDs, more use has been happening in Japan — over 30 percent. As an example, there are more LED TV design activities in Japan. The biggest influencers for LEDs in Japan are Canon and Sony.

Changes due to M&A
Another trend visible in the design spend share has been the changes due to mergers and acquisitions.

As an example, we have the Mitac Group, which acquired Magellan’s consumer products division. In 2008, Mitac Group had 78 percent spend in Taiwan, and 18 percent in the USA. After acquiring Magellan, Taiwan’s design spend share became 57 percent and USA’s became 13 percent. On the other hand, France’s share grew to 17 percent and Russia’s to 7 percent. This indicates that country-wise, budgets do get changed. This is just one example.

These are indeed very interesting numbers and facts, and as mentioned earlier, India has a considerable opportunity as an influencer in the semiconductor design spend going forward.

Seeking jobs in embedded! Can anyone help?

Ever since I have blogged about embedded companies in India, I’ve received a few messages, regarding jobs in the embedded segment in India. Some others have dropped hints about companies who haven’t made my list!

It seems the companies are not hiring, or they’ve put hiring on freeze. Does it mean that not many projects are going on currently? Or, is there a way for freshers to make a start somewhere? For starters, those who want their companies listed in any top 10 list, are they even trying to help freshers or those looking for better jobs in the embedded space? What is their policy for hiring?

Or, are they too dependent on design services, so much that they do not have enough products to work on or develop! Or, maybe, they don’t have many ongoing projects? I have had so many people tell me “India should do product development in semiconductors!” So, is that really happening? Or, is it merely a statement?

I did come across this web site called Dev Seeker, which is said to list jobs in embedded. DevSeeker also has a page that lists some of the embedded companies in India.

I also came across a blog on Monster, which lists several posts from some freshers, as well as some others who have actually asked folks to send in their resumes.

There is another web site from KBS Consultants, which has listed some jobs in the embedded segment. Another site, called GotAChance, also has links to jobs in the embedded space. Another search led me to a site called ITJobs.

By the way, I’ve no way of knowing whether any of the sites are updated, or, if they are, how frequently are those getting updated with the latest information. Sincerely hope that all of these sites are getting updated frequently!

Whenever I speak with semiconductor professionals, they don’t stop raving about India’s might in embedded. If that’s the case, why are so many talented people not being able to find jobs? Or even worse, how do freshers get to make a start? I am not sure if companies offer freelance work for embedded software engineers. However, it is an option that could be considered.

There are several companies in China and Japan who are seeking fresh and good talent in the embedded space. A Japanese delegation visited India last August for the India-Fukuoka (Japan) IT, Embedded Software and Semiconductor Business Workshop 2008. Some of companies are:

* Daichi Institution Industry Co. Ltd
* DISCO (Dai Ichi Seitosho Co. Ltd) Corp.
* Inoueki Co. Ltd
* JETRO (Japan External Trade Organization)
* Kyushu Economic Research Center
* CLAIR (The Japan Council of Local Authorities for International Relations), Singapore

Prior to that, last May, the India Semiconductor Association (ISA) and the UK Trade & Investment and Science & Innovation Network launched a study titled “Scope for collaboration between India and the UK in semiconductor driven industry 2008.

I am also aware that China and Taiwan require lot of talent in embedded software and systems. They can surely make use of the talent available in India.

I am sure that all of these folks would be able to help out at least some of those looking to make a career in embedded systems and software. Otherwise, what’s the end result of making such trips to India and talking about India’s talent in embedded! Freshers need to make a start somewhere, so please help as many as possible.

To all of those freshers starting out to make a career, try and get the relevant experience, and the money will follow. Do not pursue it the other way round.

This is a request to the global embedded systems and software fraternity — there are quite a lot of talented and fresh engineers in India in the embedded systems and software segment, who are also seeking jobs. Give them, or at least, some of them, a chance! Can you kindly help them?

Top 10 captivating moments in Indian semicon during 2008

Yes, the time has come for all of us to say goodbye to this year. It has been a very captivating year for the Indian semiconductor industry. Some consider it to be a year the industry came of age, while some others would look at the year as one where fab promises failed India.

Nevertheless, as I’ve maintained, having or not having a fab won’t affect India very much as its traditional strengths have been in embedded and design services.

There have been several moments during the year that I personally savor. In fact, I have either witnessed most of those or written/blogged about them.

The top 10 captivating moments in Indian semiconductors during 2008, according to me, are:

1. S. Janakiraman, former chairman, ISA, declared before the world, in May at Dubai, during the IEF 2008, about India’s growing strength in global telecom.

2. Growing interest in the solar photovoltaic industry in India, and subsequent proposals made by various companies, including Reliance.

3. EDA companies, such as Magma and also Synopsys, making their entry, or at least, intentions known, in the solar/PV industry.

4. Intel’s new chip, designed largely in Bangalore, and of course, the Intel Developer Forum in Taipei, Taiwan.

5. Visit of a strong Japanese delegation to Bangalore, which showed remarkable keenness regarding possible investments in India.

6. BV Naidu quitting SemIndia, and putting in doubt India’s fab story. Well, that’s a different story, and one person’s exit would not mean much to such a large industry.

7. ISA Excite, and the minister announcing that Karnataka could have its own semiconductor policy. The policy should be out in the new year, hopefully.

8. AMD’s new chip, the Shanghai, which again, had a lot of involvement from AMD’s Bangalore team.

9. NXP India achieving RF CMOS in a single chip. The entire analog and RF work was done in Bangalore, India.

10. Go parallel or perish, said James Reinders, of Intel! Parallelism or parallel computing involves the simultaneous use of more than one computer or processor to execute a program.

I was also present during the launch of Synopsys’ Galaxy Custom Designer, which tackles the analog mixed-signal (AMS) challenges. It would occupy a joint 10th position.

There may have been some other moments as well! Would like to hear from all of you what are those other great times in India semiconductor industry during 2008!

90pc fab investments for 300mm capacity: SEMI

Recently, SEMI (Semiconductor Equipment and Materials International) released its World Fab Forecast report. This report mentions that projected decline in world semiconductor fab equipment spending of 20 percent is likely for 2008. However, a rebound of over 20 percent in spending is expected in 2009, driven by over 70 fab projects.

The August 2008 edition of this report lists 53 fab equipping projects and up to 21 construction projects for fabs in 2009. It is sincerely hoped that at least one of the fabs likely from the Southeast Asian region is from India!

With the help of Scott Smith Senior Manager, Public Relations, SEMI, I was able to get in touch with Christian Gregor Dieseldorff, Senior Manager of Fab Information and Analysis at SEMI, in an attempt to find out more about the decline in global fab spends, these new fabs, and how these fabs can lead a turnaround in the global semiconductor industry. Thanks Scott!

So what are the chief reasons for the decline in fab spends during 2008? According to Dieseldorff, given the weaker economic conditions globally, coupled with higher energy and commodity prices and the financial crisis, the overall outlook for semiconductor growth in 2008 is for low-single digit growth in both revenues and units. As such, device makers have responded by cutting back their capital spending and pushing out fab projects or putting them on hold.

I was keen to find out the geographic breakup of these 70 new fabs that are likely yo come up in 2009.

Dieseldorff advised that these are not 70 new fabs coming up in 2009. Rather, the numbers reflect 300mm fabs only, and is a mix of on-going and new projects for fabs equipping and fab construction projects in 2009.

For equipping 300mm fabs, SEMI expects about: Americas 8, China 5, Europe and Mideast 4, Japan 7, South Korea 11, SE Asia 3 and Taiwan 15.

For 300mm fab construction projects, SEMI expects about: Americas 3, China 2, Europe and Mideast 1, Japan 2, South Korea 3, SE Asia 2 and Taiwan 8.

What are the salient features of some of these new fabs likely to come up next year (for instance, new tech nodes)? Dieseldorff highlighted that about 90 percent of the investments are for 300mm capacity, and the amount of spending for advanced nodes, such as 65nm, is increasing.

“Also, device makers are building larger fabs, which are termed “mega fabs,” so, to potentially realize a greater return based on scales of economy,” he added.

How will these new fabs contribute to a better performance from the global semicon industry? This will be quite interesting to witness.

Dieseldorff said that over the past several years, demand for semiconductor devices has been quite strong, and so, the industry has had to bring on capacity to support this need, both in terms of needed capacity and technology. Even with the slower market growth in 2008, recent industry data shows healthy levels of fab capacity utilization, especially for the advanced technology generations and for 300mm manufacturing.

He added: “The expectation is that demand for semiconductors will strengthen once global economic conditions improve. So, the capacity addition that is coming online this year and the fab projects that are equipping and beginning construction in 2009 are necessary to meet the future demand.”

So how will all of this affect the overall memory market (e.g., 42pc increase in share for memory)? Dieseldorff shared his thought, a fact, known well to those in the semiconductor industry, that the memory market has been battered by declining average selling prices and a condition termed by some as “profitless prosperity.”

“Looking at demand forecasts specific to memory, tremendous growth is anticipated,” he forecasted.

However, the manufacturers in this device segment are battling it out for market share, and the general expectation is that consolidation will continue.

Also, joint-ventures and partnerships are becoming increasingly critical in the memory sector as manufacturers seek to leverage their existing resources to meet future technology and capacity requirements.

It would be interesting to find out why Taiwan and Korea are forecasted as likely to exceed Japan in fab spend?

According to Dieseldorff, in Korea, Samsung has been and is the key spender, and as a company, it will continue to invest so to have a dominant share in the memory sector.

He said: “In 2009, our expectation is for the DRAM manufacturers in Taiwan to boost spending after cutting back this year. We expect seven new 300 mm fab lines in Taiwan to come into production over the next two years.”

However, spending in Japan has been more measured and is likely to remain so. Toshiba, and its joint-venture partner, Sandisk are the big spenders in Japan, when it comes to new fab capacity. Other Japanese semiconductor manufacturers are more cautious and are focused more on technology spending.

What India brings to the table for semicon world! And, for Japan

This semicon blog’s title has been inspired by some queries, largely from friends in Japan, who are looking at the Indian semiconductor market. The topic of great global (and Japanese) interest is: What does India bring to the table for the semicon world to go to India!

Interesting! The world has been keenly following the Indian semiconductor and fab policy, and can gather a lot of information off my blog itself! For those who’d like to know it all again in specifics, here we go again!

Indian semicon and fab policy
Around September last year, the Department of Information Technology, Ministry of Communication and IT, Government of India, came up with the Special Incentive Package Scheme (SIPS) to encourage investments for setting up semicon fabs, and other micro and nanotechnology manufacturing industries in India!

The “ecosystem units” have been clearly defined as units, other than a fab unit, for manufacture of semiconductors, displays, including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; solar cells; photovoltaics; other advanced micro and nanotechnology products; and assembly and test of all the above products.

What has happened since?
Lots! Initially, there were two major proposals from HSMC and SemIndia for setting up wafer IC fabs. While those haven’t really taken off yet, more investments have since happened in India.

Quite recently, the Indian semiconductor and fab policy attracted 12 major proposals, worth a whopping Rs. 93,000 crores! The Department of Information Technology (DIT), Government of India, has set up a panel of technical experts to evaluate these proposals.

Ten (10) of these proposals are for solar/PV. One is for a semiconductor wafer — from Reliance Industries worth Rs. 18,521 crores, and another for TFT LCD flat panels — from Videocon Industries, worth Rs. 8,000 crores.

The 10 proposals for solar/PV are from: KSK Surya (Rs. 3,211 crores), Lanco Solar (Rs. 12,938 crores), PV Technologies India (Rs. 6,000 crores), Phoenix Solar India (Rs. 1,200 crores), Reliance Industries (Rs. 11,631 crores), Signet Solar Inc. (Rs. 9,672 crores), Solar Semiconductor (Rs. 11,821 crores), TF Solar Power (Rs. 2,348 crores), Tata BP Solar India (Rs. 1,692.80 crores), and Titan Energy System (Rs. 5,880.58 crores). This is as far the latest developments are concerned!

Solar fabs have also been announced earlier by leading firms such as Videocon, Reliance and Moser Baer, etc. (Two of them are figuring here again!) There are also talks about developing solar farms in India, which is good.

What are India’s strengths?
The clear strengths of the Indian semiconductor industry are embedded and design services! We are NOT YET into product development, but one sincerely hopes that it gathers pace.

The market drivers in India are mobile phone services, IT services/BPO, automobiles and IT hardware. India is also very strong in design tools, system architecture and VLSI design, has quite strong IP protection laws, and is reasonably strong in concept/innovation in semiconductors.

Testing and packaging are in a nascent stage. India will certainly have more of ATMP facilities. Nearly every single semicon giant has an India presence! That should indicate the amount of interest the outside world has on India. In fact, I am told, some key decisions are now made out of the Bangalore based outfits!

Electronics manufacturing
In the electronics manufacturing domain, India’s strength lies in hardware, embedded software and industrial design, OEMs, component distribution (includes semiconductor and box build), and end user/distribution channel, as well as more than moderate strength in product design and manufacturing (ODM, EMS).

India is likely to witness $363 billion of equipment consumption and $155 billion of domestic production by 2015. India’s electronic equipment consumption in 2005 was 1.8 percent. It is likely to grow to 5.5 percent in 2010 and 11 percent in 2015, as per a joint study conducted by the ISA and Frost & Sullivan.

The Indian semiconductor TAM (total available market) revenue is likely to grow by 2.5 times while the TM (total market) is likely to double revenues in 2009. The TAM is likely to grow at a CAGR of 35.8 percent and the TM is likely to grow at a CAGR of 26.7 percent, respectively, during the period 2006-09.

Telecom, and IT and office automation are the leading segments in TM and TAM. Consumer segment occupies the third fastest growing area in the TM, and the industrial segment is the third fastest growing area in the TAM.

The major semiconductor categories of interest include microprocessors, analog, memory, discretes and ASICs, while the major end use products include mobile handsets, BTS, desktops, notebooks, set-top boxes and CRT TVs.

India, the embedded superstar!
India’s embedded design industry has been going from strength to strength. An IDC-ISA report forecasts the revenues from India’s VLSI, board design and embedded software industry to grow to $10.96bn by 2010 from the current $6.08bn in 2007.

India is also focusing on moving up the semiconductor value chain. It is emphasizing on end-to-end product development, investing in IP development, developing India specific products, and partnering with OEMs to understand the market needs. Also, be aware that several leading EMS firms are present in India as well.

What should investors do?
Certainly, invest in India! The Indian semicon policy clearly defines the “ecosystem units.” Global manufacturers of displays, including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; including SSDs, solar cells; photovoltaics; other advanced micro and nanotechnology products, should certainly look at investing in India, and consider manufacturing here!

Lots of solar fabs are likely to come up, so there will be a great demand for solar related equipment, chemicals, testing, etc. We hope that one wafer IC fab comes up as well, so there will be opportunity for semicon equipment manufacturers. However, do be prepared to wait as things may not move as fast as some may expect.

There is lot of opportunity for fabless companies and in ATMP as well. There are several Indian firms, small ones, who may be interested in partnering. Some trading companies may find India of interest, especially in the solar/PV and ATMP segments.

Keep an eye on the IT/semicon policies some states, especially, Karnataka have in store. A host of opportunities could become available, once Karnataka comes up with a policy. More states may follow suit!

Well, do contact me in case you need further assistance!

Japan semicon firms seek close ties with India

The India Semiconductor Association (ISA) recently organized the India-Fukuoka (Japan) IT, Embedded Software and Semiconductor Business Workshop 2008. A host of companies and institutes from Fukuoka, Japan participated in the workshop seeking partnerships, alliances, and business in the semiconductor space in India.

My first impression was that all of the Japanese firms present at the workshop are quite interested in the Indian semiconductor market, and especially in the embedded space. Besides, some of them may look at investments, should the opportunity arise. Some of the participants are also looking at the direction fabs are taking in India, besides the solar/PV market.

The participating companies and institutes at the workshop were:

1. Daichi Institution Industry Co. Ltd
2. DISCO (Dai Ichi Seitosho Co. Ltd) Corp.
3. Fukuoka University
4. Fukuoka Industry, Science & Technology Foundation
5. Inoueki Co. Ltd
6. Invest Japan
7. JETRO (Japan External Trade Organization)
8. Kyushu Economic Research Center
9. CLAIR (The Japan Council of Local Authorities for International Relations), Singapore

Masane Saito, Chief, JETRO, said that the total trade between India and Japan was worth $9.9 billion during 2007, a 25 percent growth. India’s strengths included knowledge-based services, high-quality talent, etc. He added that Japan required a lot of embedded systems engineers, perhaps, hinting at Indian engineers and the opportunity that lies ahead of them.

Todd Takaki, Director, Inoueki, clearly highlighted that his company was looking at the manufacturing segment in India. A semiconductor trading company, it delivers chemicals to IC fabs, among others. He added that companies from Japan needed to see the inroads being made in India, both frontend and backend. While Inoueki is also looking at making investments in the country, Takaki stressed the need to have a developed market.

Akihiro Kawaguchi, International Science Technology Co-ordinator, Fukuoka Industry, Science & Technology (IST) Foundation, highlighted the Fukuoka Cluster for advanced system LSI design and development. He also touched upon the Silicon Sea Belt Fukuoka Project, which streches from China, covering South Korea, Japan, Taiwan, Hong Kong, Singapore, Malaysia, right up to Bangalore, India. This belt has the potential of the world’s largest semiconductor market (60 percent), emerging car industry market, ever-developing wireless market, and the world’s largest population of engineers.

The Fukuoka IST is also part of the Knowledge Cluster Initiative, a national program carried out by Japan’s Ministry of Education, Culture, Sports, Science and Technology (MEXT), in co-operation with the local governments.

Dr. Hajime Tomokage, professor, Fukuoka University, touched upon the semiconductor business network via the MAP (microelectronics assembling and packaging) and RTS (reverse trade show) programs.

The Kyushu silicon island has a 6 percent share of the global IC production with over 20 percent raw wafers. SUMCO has four fabs in Kyushu. The silicon island also has 16 fabs, including those of Renesas, Toshiba, Sony, NEC, Yamaha, etc. Overall, it is home to nearly 650 semicon related companies. Kyushu is now looking for Asian customers, and specifically, from India.

Some other features include the national project on SiP (system-in-a-package) and MEMS, which have been place since 2002, as well as the SiPOS (System Integration Platform Organization Standards) platform.

Keiji Honjo, Leader, Product Innovation Sales Group, DISCO Corp., touched about his firm’s business. DISCO’s activities revolve on: manufacture and sale of precision cutting, grinding and polishing machines; maintenance of precision cutting, grinding and polishing machines; training in the operation and maintenance of precision cutting, grinding and polishing machines; disassembly and recycling of precision cutting, grinding and polishing machines; lease of precision cutting, grinding and polishing machines, and sale of used machines; manufacture and sale of precision diamond abrasive tools; and for-fee processing. It is also seeking business interests in India.

Yutaka Akagawa, Executive Director, Daichi Institution Industry Co. Ltd, said the company is also into 8Gen LCD business. It transfers the glass substrate for the LCDs. The company highlighted Clifter, a device, which carries the wafer cassette, LCD cassette, and so on, vertically, with the holding cleanliness to the clean room on the up-down floor.

Interested Indian companies desirous of tying up with these Japanese companies are welcome to send in their queries.

In my next blog, I will discuss specifically what India brings to the table for the semicon world to go to India, and especially, Japanese companies, since we are on Japan! This is also a request from a friend from the Far East!! I may be a bit inaccurate in my assessment, but I will try my best.