India: The rising player in the world electronics design stage

The Indian semiconductor industry was born in the earlier part of the 1980s. It has been a silent driver of change in the technology sector by its gradual transition to higher end complex work, protection of IP and the quality of output. Among other factors, it has been a key influencer in building a greater credibility of the India outsourcing model.

Until a few years ago, the design services that companies in India offered were limited to front-end logic implementation while the design was architected elsewhere. Over time, the scale of operations and range of activities have steadily grown. The industry in India had evolved into a mature, end-to-end provider of electronic design in the world. The industry has seen a transition with both multinational and local companies in India offering services from specification to tape-outs. The country has today emerged as a destination for world-class designs with excellence in both the front-end and back-end.

In 2008, the total semiconductor design industry in India was an estimated $7.37 billion. The industry employed an engineering workforce of 153,000 in chip and board design plus embedded software. Embedded software constituted the largest part of the industry, with an 81 percent share.

Key strengths
The Indian electronic design industry has nearly 20 years of design expertise build up, project management expertise, a proven track record, scalability of talent, and a competitive cost structure. Today it also offers a high level of maturity in product engineering and development.

The country’s solutions provisioning mindset that offers a combination of hardware, software and applications has helped in developing a total design solutions industry; and Indian companies have been able to capitalize the early start in the services space in the global market.

The industry has developed a high degree of project management capabilities, thus ensuring alignment with market requirements of quality and timely output. The reverse brain drain from the U.S. and Europe into India has also provided scope for a better understanding of market conditions.

Product engineering solutions from India span the entire product lifecycle across industry segments. There is now increased focus on product innovation, thereby extending the industry’s expertise in services to the logical next step of product designing.

Companies in India have been providing designs worldwide for wireless, automotive and consumer electronics. The wide services base, from basic IT to advanced technology solutions in important industry segments such as automotive, digital consumer, industrial automation, medical, defense, etc., is a huge plus.

India owes its success in the knowledge sector mainly to the quality and availability of its engineering talent pool. Indian universities have been producing electronic engineers in huge numbers, with English as a medium of instruction. According to the ISA-E&Y Report 2007, the country ranks high among its Asian competitors on this factor. Industry experts rate the quality of talent as comparable to those other Asian countries, like Taiwan, China, Singapore and Japan. Presently, among the peer countries, graduates from Japan are the most “design aware”, but India is quickly catching up. As the industry in India further matures, the talent is expected to scale up to become the best in Asia.

Another point worth emphasizing is that there has not been a single Intellectual Property Rights (IPR) violation since the industry commenced its activities over two decades ago. Experts believe in the short to medium-term, and India is competitively well placed among the other Asian countries. The increasing number of chip design companies in the country points towards the maturity of the design industry, as more and more chip design companies set up captive design service centers in India.

India’s position in Asia
India is well placed for growth within Asia. Other than captive MNCs, the pure India-based companies have become truly global. For the short to medium-term, India is very competitively placed. In addition, as product development involves an increasing amount of software, it plays to one of India’s strengths.

After Vietnam and China, India has the best cost structure. We do see that gap narrowing as Vietnam and China will also hit Indian costs as experience level in these countries in the technology domains will increase.

Emergence of a domestic market
An emerging advantage for India is the local market for electronic design. Availability of local market offers vast potential.

In the years ahead, there will be increased demand for country specific design solutions in areas such as renewable energy, security and healthcare. There is increased recognition within the industry today to define the product requirements for this market that are distinct from global trends, and develop solutions that are viable in this environment. Experts feel India now needs to develop local brands in areas such as mobile phones, MP3 players and photo frame markets.

Going forward, the infrastructure and the lack of local brands need to be addressed to avoid bottlenecks in growth.

R&D
If India has to maintain its competitive edge, it needs to improve on some of the existing capabilities. In talent, the country’s higher education system needs to align itself more towards industry requirements. The level and quality of research emanating from Indian universities need to improve with better industry and academia interaction.

Business environment
The factors that make up the quality of the business environment in a country are varied – the kind of government support an industry receives, the incentives it provides the industry, the strength of the legal and IPR regime, the ease with which companies can obtain clearances and licenses, and labor laws. India’s business environment for the electronics design sector is reasonably good now and improving steadily, and the Government is seeking to address the gap in electronics manufacturing.

The existing system needs to encourage spin-offs from established companies for revitalizing the Indian entrepreneurial spirit and create “game changers”. Also, a definite need exists to create large-scale incubation centers for the electronics sector in smaller towns, too.

Looking forward
Global leaders such as STMicroelectronics, Freescale Semiconductor, Texas Instruments Inc., and NXP Semiconductors have started to develop innovative products for the India market. Products in automotive domains such as automotive NOS (Network Operating System), EUCD, AUTOSAR stacks, infotainment solutions, and image and graphics processing engines are starting to happen.

Complete chip design from concept to silicon (in production) for MCUs, DSPs, SoCs in graphics, audio/video application chips including analog and mixed-signal content with power management and high-speed communication interfaces, and many more likewise are already taking place.

In the years ahead, the focus would be on product creation and innovation. Companies in India have the capability and now need to move beyond the services model to domestic fabless design and IP creation. Only then can we speak of an industry reaching the needed degree of maturity and stability.

About the Author
Poornima Shenoy is the President of the India Semiconductor Association (ISA).

Acknowledgment
The author would like to thank the following leaders whose inputs were valuable for writing this article: Jaswinder Ahuja, Cadence Design Systems; Ganapathy Subramaniam, Cosmic Circuits; and Praveen Acharya, KPIT Cummins Infosystems.