IndiaA Hot Cake
Highly dynamic markets demanding new product variants/models from companies have forced original equipment manufacturers (OEMs) and product companies to reduce the product development cycle time. As a result, they are outsourcing more and more of their work. Declining revenue margins and increased R&D budgets have compelled these companies to look for cost-effective centers without compromising on the quality of work. India has been a natural choice. Of course, cost effectiveness in research and development to bolster declining margins has been one of the reasons for companies to set up their offshore development centers or opt for outsourcing to engineering design companies in India. In addition, the huge pool of engineering talent and the English language proficiency are significant factors in the growth of chip design work in India. There are nearly 4,000 engineering colleges in 28 states admitting nearly 5,00,000 students every year, give India a competitive advantage in human resources.

Challenges
India started as an activity-based center mainly due to its cost advantage and skilled workforce. However, as India realized that costs couldnt be a major competitive advantage in the long run, both captive and third party companies started developing competencies in IP development and integrationthereby complete product development.

Providing end-to-end solutions to customers is proving to be a major challenge before the Indian design market. In India, the indigenous design industry is scattered at different places catering to various services. Serving as a one-stop solution for global customers as well as fulfilling the demand of our own growing semiconductor consumption market, looks like a rocky journey.

Show Stealers
The recent years can easily be marked as the years for chip designing. The overall outsourcing of chip design work to India increased as companies set up their captive centers or outsourced projects to Indian firms. AMD, one of the major chipmakers, acquired ATI, a company having a foothold in graphics, chipsets and consumer electronics. The acquisition created an opportunity for AMD to transform from a processor innovation leader into a preferred partner of choice for solution-level innovation. Another player, NXP Semiconductors, came with a special Indian market strategy to popularize its key products like chips in low-cost phones. The company acquired Silicon Labs cellular business enabling it to design single chip cell phones, reducing the cost of cell phones to a great extent.

Renesas Technology, Japan set up its offshore development center at KPIT Cummins to boost its design and development capabilities. Ahmedabad-based eInfochips entered into a strategic partnership with Cubic Micro, a leading International Manufacturers Representative and RF Design Services company, for its Japan operations. The company also established its Chicago operations. The other was the acquisition of the Indian operations of US-based Applied Micro Circuits Corporation (AMCC) by Eleven Technologies.

India, till now, was known as the outsourced design hub for the world market. But, that changed this year, with the industry starting to look at India as a major consumer market for semiconductors. Electronics consumption and production is increasing resulting in a large demand for semiconductor products. Also, fast growing markets like consumer electronics, wireless, and communications are driving the need for semiconductors as consumers demand high-performance, and energy-efficient and sleek devices. Most players are working on new innovations to lure the evolving Indian consumer brigade, and this has become the prime concern behind every innovation.

In product design, engineering achievements in India include the development and industrialization of high-value SoCs (System on Chip), embedded systems, application specific IP (Intellectual Property), and reference designs in various application segments including telecommunications, imaging, car multi media, computer peripherals and industry control.

Freescale semiconductors introduced two chips for digital multimedia applications for home, whose total design cycle was completed in India. ST Microelectronics in India developed embedded solutions for a wide variety of applications, including Bluetooth, Wireless LAN, DSL, STB and DVD. Among them the most hyped launch was the STi5107, the first made-in-India single-chip solution to make a digital set-top-box.

For the portable device market, Texas Instruments launched the TPS61200, a very low input voltage DC/DC boost converter, which will enable portable electronic-end equipment to draw power from alternative new energy sources like solar and micro-fuel cells. In mobile technology, one chip solution for cell phones was the new idea of innovation and industry leaders including Texas and Freescale started working to offer this. However, the solution is yet to hit the market. It is speculated that the use of this chip in mobile phones will lower the cost to a great extent. Giving a further push to Indias claim as a product design center, eInfochips unveiled an advanced intelligent IP surveillance camera IPNetCam with complex video analysis that will help companies in building a range of IP surveillance cameras with low development costs.

Manufacturing: The Road Ends Here
After witnessing remarkable growth in embedded software and semiconductor design, manufacturing is the buzzword. India is the only country in the world which has the unique advantage of two key components of semiconductor design: ecosystem-design and testing, with manufacturing needed to complete the cycle. The semiconductor policy hopes to close that circuit.

In the wake of the policy, companies like Hindustan Semiconductor Manufacturing Corp (HSMC), Infineon, and Solar Signet have already announced big-ticket investments in semiconductor manufacturing in India. SemIndia is already working on its project Fabcity. However, it remains to be seen whether the government will increase the incentives for specific projects, as Israel offered a 60% grant for chip major Intels $1 bn fabrication unit against its normal incentive package of 32%. Similarly, China, which offers minimal incentives between 25-30%, sometimes offers more benefits.

Kumar Anshuman
anshumank@cybermedia.co.in

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