Ten reasons why India will achieve leadership in semiconductor and electronic designs

Just as India emerged a global leader in software in the 1990s, India has the potential to emerge as a leader in semiconductors and electronics in the new millennium. Here are 10 reasons why this should happen:

Semiconductor Design Outsourcing: Just as enterprise application software of MNCs became outsourced to India, the last seven years have seen significant level of progress with Integrated Device Manufacturers (IDMs) and FSAs sourcing designs from their own captive centers and third-party design houses in India. This trend, started by Texas Instruments in mid 1980s, has accelerated over the last seven years. Now most IDMs, and the top 10 fabless companies have their own centers in India. Third-party design houses such as HCL, MindTree, Sasken, and Wipro have become key sources for complex designs complementing and value adding to the captive centers. Availability, affordability, and scalability of the talents in the VLSI designs have been prime factors leading to such a progress of India emerging as the design hub.

Software becoming the key differentiator: As the semiconductor and electronic designs become complex with a lot more intelligence, the level of software that needs to be developed to fully exploit the capabilities are ever increasing. Software, which was the key element for complex computing and communication devices, has become the critical differentiator in consumer appliances and control systems. Millions of lines of code are getting into HDTVs, traffic signaling systems, and even complex gaming systems and simple toys. India’s strength in application software has become automatically extended into the embedded software space, the critical element to differentiate one gadget from another in the electronic product market.

Intellectual property protection: Electronic designs thrive on innovation through deploying the latest in technologies to address unique needs of the market. The value chain for addressing the market starts with an idea, followed by design and intellectual property (IP) protection. The need for IP protection is essential for MNCs to source designs from their captive centers as well as third-party design houses. IP policies and legal systems in India are at par with those in the West. The design communities as well as Indian companies are extremely sensitive to the need for protecting IPs of their own and their customers. In the last decade there have been no major IP violations of concern to the global companies. India is seen as a safe haven to source complex and innovative semiconductor and electronic product designs.

Retuning Indians: The Indian community has made its mark in hi-tech industries in the West in the last decade. Now several Indians occupy the CEO positions in the global hi-tech companies. Many of the Indians who emigrated in the 1980s and 1990s have gained excellent global exposure in the semiconductor, electronics, and software arenas as architects, product managers, and designers. With the growing opportunities in India to leverage their skills, these skilled Indians have started moving back to India in the last five years. This is further aiding the industry to bring the best practices into the country’s industry.


Growing Local Market: In 1980s and 1990s any latest electronic product in the global market took three to five years to appear in the Indian market. This was more due to the import-export restrictions, the smaller size of the market, and affordability of such products in the country. Liberalization of the import-export policies in early 1990s, high growth rate of GDP, global exposure of Indians on the move, and an increasing middle-class population have aided the local consumption of electronic goods in India multifold in the recent times. In 2007 India is estimated to have consumed near 100 million mobile handsets, or 10 percent of global volumes. The LCD penetration is growing at a rate of 60 percent year on year. Tata, the leading industrial house has announced a $2,500 four-wheeler car for mass consumption. Electronics and software get into engine control, dashboard designs, and infotainment. High local consumption leads to increased local investment in design and manufacturing.

Bottom of the pyramid: India has more than one billion people with large part forming the pyramid bottom. Electronic products have under penetrated this segment. Cosmetics and mass-market product companies have leveraged the growing appetite by innovating products (such as a $0.02 shampoo sachet). Affordable mobile phones with attractive service options ($1.0 recharge) have enabled the common man to communicate anywhere at any time. Wireless Technologies (such as Wi-Max) have the potential to reach content to remote places overcoming the limitations of last mile public infrastructure. Aspirations and affordability of this segment is ever increasing. India is becoming the test bed for innovating and deploying products that may not be of interest to West. Hence India has an opportunity to leverage these products and technologies in the developing world beyond India and enhance its business further.

Government policies: Recognizing the emerging opportunity for India to achieve leadership in the semiconductor and electronic space, the Indian government has been active in carving out policies and enabling investment to fuel further growth. The government announced its first Semiconductor Policy in which it will provide 25 percent incentives for the setting up of capital-intensive assemblies, test and manufacturing facilities for semiconductor, solar, disk, and LCD plants. Several new projects in these areas have been announced and some of them are already operational. In addition more than 100 Special Economy Zones (SEZs) have been set up with world-class infrastructure as well as simplified procedures to enable export-oriented units to thrive. All major EMS companies such as Flextronics, Foxcon, and Sanmina, as well as product companies like Dell, Motorola, and Nokia have set up manufacturing facilities.

Industry-academia collaboration: India produces more than 500,000 engineers every year with nearly 50 percent of them in electronics and software. Several government and private initiatives have been launched to improve the quality of talent and the level of research in academic institutions. The Indian government had earlier launched a Special Manpower Development Program (SMDP) through which industries collaborate with academia by providing tools at affordable prices, as well as shape up the curriculum and train the faculty on latest technologies. In addition many of the MNCs and leading Indian business houses are working with institutions to set up research labs and Centers of Excellence (CoE) to enable advanced research and execute complex designs.

Collaboration within Industry: Realizing the need for the industry to come together to leverage the opportunity to achieve leadership, semiconductor industry leaders in India came together to form India Semiconductor Association (ISA) on similar lines as Semiconductor Industry Association (SIA), Fabless Semiconductor Association (FSA), and Taiwan Semiconductor Industry Association (TSIA). More than 130 global and Indian companies work on a common platform and deliberate ways to accelerate growth of the semiconductor and electronics industry in India. ISA enables industry leaders to come together to share their vision, enhance collaboration, strategize seeking government support, and work with academia to enhance supply of talents. In addition ISA has set up a Special Interest Group (SIG) to focus on technologies that the industry needs.

Ecosystem support: Silicon Valley has made a reputation for itself today not because so many intellectuals have congregated in one place but due to the overall ecosystem that has come together to enable that. The same is true for the semiconductor and electronic industry in India. Leading EDA industry players such as Cadence, Mentor Graphics, and Synopsys are actively present with their own design centers as well as support centers to promote designs out of India. Bodies like The Indus Entrepreneurs (TiE) are actively promoting start-ups and entrepreneurship. Software Technology Parks of India (STPI) has set up Orchid Technology Park to provide ready to use infrastructure for startups. India is already attracting huge foreign direct investments. In addition venture capitalists have turned their eyes to India.

To sum up, the reasons to achieve leadership in electronic and semiconductor space is here and now. This is acknowledged and well leveraged by global and Indian organizations and entrepreneurs.