The journey which started with Texas Instruments vision to set up their design center in India in the 80s, has come a long way with the design ecosystem firmly taking root in the country. Freescale, which has the largest R&D center outside of the US has been working on 3G technology from about 2003, when the technology was just being talked about and there were few implementations even globally.

Some sort of ecosystem seems to be developing around this with Chennai emerging as an auto and telecom manufacturing hub, giving an opportunity to semiconductor design firms to address those markets. Nokia has set up a telecom park which houses more than ten of its partners. Simultaneously, leading EMS vendors like Flextronics and Foxconn are already setting up their facilities in different parts of the country.

There is another development which is very encouraging, that is the third party outsourced semiconductor design services getting outsourced to Indian IT services companies like Wipro, HCL Technology, TCS, MindTree and others. Most of these IT services companies have set up semiconductor practice with domain experts who are providing services to semiconductor pure play companies. Thanks to the cost advantage which is still there, this particular ecosystem is also growing fast. Wipro, for example, provides IP services for wireless and wired connectivity.

Outsourcing of design also has to do with fast technology obsolesce which necessitates shortening of product life cycle and time to market, besides problems of managing the supply chain. An example of this trend can be seen in the NEC Electronics outsourcing to Wipro, which renders semiconductor design services and has established a dedicated engineering development center. The development center is mandated to provide front-end and back-end design services and IP to NEC Electronics for Application Specific Integrated Circuits (ASICs) and microcontrollers in the Digital Consumer and Automotive areas.

The situation on the global front looks grim if we go by Gartners analysis. The analyst firm has cut its worldwide chip forecast by one half. In December 2007, Gartner had concluded that that the overall IC market would grow by about 6.2% in 2008 over 2007. In a revised estimate, it pegs growth at only 3.4% in 2008.

Some consolidations and de-consolidations also took place. NXP, for example, decided to acquire the Broadband Media Processing (BMP) business of Conexant Systems thereby boosting its set-top box and digital TV operations business. STMicro deconsolidated its flash memory business and formed a JV with NXP to combine key wireless operations to form a joint-venture company with strong relationships with all major handset manufacturers. The new company, according to the agreement, will cater to 2G, 2.5G, 3G, multimedia, connectivity and all future wireless technologies.

The Ecosystem
Much has happened since the global semiconductor industry grew at the rate of 25 to 30%. According to the recent ISA-IDC report, embedded electronics is becoming pervasive thanks to the growth of consumer devices, handheld, automotive, or medical devices. The total design services market in India, according to the recent ISA-IDC report stood at $6.08 bn during the year 2007. The market, according to the report is led by embedded software development followed by VLSI design and hardware/board design.

Multi-functionality has become the order of the day. As the market matured, the growth came down to single digit. According to some estimates, it is hovering at around 6 to 7%. The center of gravity is moving from developed countries like US and Europe to emerging economies India, China, and Brazil, where the requirements are quite different.

So there was a realization in the industry about the importance of addressing these emerging markets. This has resulted in percolation of technologies to this part of the world in different ways. The ecosystem, particularly wireless, automobile, and consumer electronics industry are on the growth mode. There are already 270 mn cellular subscribers in India as of July 2008. Companies started realizing that low cost does not mean low technology; it is not that India is a market for low cost products.

India as a Market
Till a few years ago, India was not seen as a market due to poor consumption of electronics and telecom products and services. But with the boom in telecom and Internet services, together with the electronics industry, semiconductor design companies have started to look at India as a marketwhere they came primarily for talent and cost. Sales was something which never really was on their agenda. But things are changing, albeit at a slow pace. Some strong indications are already there. Texas Instruments is seeing heightened demand thanks to healthy growth in industrial and medical electronics, and in the energy space (two of its leading customers in India happen to be GE Medical systems and Conserv). NXP is actively promoting its Nexperia Cellular Systems for ultra low cost handset and has already found a customer in Orpat, one of the leading clock makers in the world.

The Semicon People
	The Big Employers Company Headcount Intel 2,500 STMicroelectronics 1,850 Texas Instruments 1,400 Freescale 1,300 NXP 900 Cadence 900 AMD 700 LSI 600 Infineon 600
Source: ISA-IDC, 2008
Around 70% of the requirement in the semiconductor industry today can be fulfilled by the graduates from the existing engineering colleges. They are very good and given the right guidance and exposure, they can do a good job. The companies need to invest in the training and development of these people. The challenge will be for the remaining 30% people

The Challenges
Employability continues to be an issue considering the nature of the industry. This has gotten aggravated also due to a tendency among fresh engineering graduates to gravitate towards the glamorous services sector. This is where semiconductor companies have lost out to services biggies like TCS, Infosys, and Wipro. But there is also a problem of scale. While semiconductor companies hire in 100s, services firms hire in 1000s and this impacts the probability of getting jobs. Incidentally, the total engineering workforce in the semiconductor design segment in India stood at 13,000 during the year 2007, according to the ISA-IDC report, and this is expected to grow to 218,800 by 2010.

Engineering design as a career is something, which has not really caught the fancy of engineering graduates in India. Though, lately, some companies are trying to neutralize this trend by driving home the benefits of being a design engineer rather than a mere software coder. This was necessitated by some talk of the long terms sustainability of flow of talent on a regular basis as these design firms scale up. Till this happens, these companies will have to struggle to find the right talent and then spend a fortune in training.

Another challenge which everybody in the design industry agrees faces but has no immediate solution for, is the complete failure of academia-industry joint research initiatives. This has remained a problem with Indian universities and even IITs, which are considered to be the repository of all the engineering genius, have failed to tap the opportunities that multinational design companies offer to them. Due to a lack of seriousness there has not been any major success coming out of the Indian universities, which is putting off many potential companies who, otherwise, would be interested in funding such programs. Whatever limited relationship the semiconductor industry has is limited to preparing the would be engineering graduates to gain skill-sets which would help them find employment in the industry. NXP, for example, has set up the NXP VLSI Lab at IIT-Delhi and is actively pursuing two more such associations.

Coming to manufacturing related challenges, whats needed is large scale local initiatives particularly on the electronics manufacturing side. The pace of which has been disappointing till now with large business houses in India like Tata, Reliance, and others remaining aloof. This is important for further fueling of the design landscape and setting up of fabs to some extent.

Key Developments
There was no dearth of good news on the semiconductor front during the course of last year, giving an indication of the shape of things to come. Global Semiconductor Alliance (GSA) together with ISA announced joint efforts which will aim at fostering business relationships among member companies while promoting international exhibitions, conferences and seminars.

ARM expanded its R&D operations, thereby making the Indian facility the largest outside its Cambridge, UK headquarters. The company is expected to grow its staff from the current 350 people, with the expanded team of engineers focusing on next-generation ARM technology for advanced digital products.

Tessolve Services showed its intention to expand its assembly, test, mark and packing (ATMP) facility in India. The company plans to acquire about 35 acres of land near the proposed 1,200-acre fab city in Hyderabad.

Some developments during the year related to the focus on low power, which has become a phenomenon across the industry. Cadence announced the industrys first Low Power Kit, enabling engineers to adopt low power techniques regardless of previous experience, with reduced risk, cost and development time.

Freescale Semiconductor announced a green design contest aimed at asking engineering students and professional developers to go green using a range of advanced Freescale technologies to build environmentally beneficial embedded systems. MindTree, meanwhile, joined the Power Forward Initiative (PFI) which will enable it to offer a Common Power Format (CPF)-enabled low-power flow to its design services customers.

Outlook
Increase in semiconductor component in automobiles and the exploding mobile phone subscriber base would be the two important drivers of the design industry, which seeks to go beyond the traditional stronghold of desktops. Even the medical segment is expected to act as a major boost with advancements in medical diagnostic.

Sudesh Prasad
sudeshp@cybermedia.co.in

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