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The total semiconductor design revenues from India grew by 31% to reach Rs 32,200 crore, up from last years Rs 24,603 crore. While this looks impressive, the dollar growthat 17%was also modest, given the recessionary phase that most of the global economy is going through.

While part of this revenue is captured by the traditional IT services firms such as TCS, Wipro, and Infosys, a part of it is through captive units like Intel, STMicroelectronics, Texas Instruments, Freescale, and NXP Semiconductors. Increasingly, specialized engineering design firms like Tata Technologies, KPIT Cummins, L&T Integrated Engineering Services are also getting into this space. But most of their design is in the area of automotive, aerospace, medical equipment, and such applications. Slowly but steadily, the semiconductor design industry in India is seeing a shift from a pure high-tech vertical focus to a mix of verticals as its customer base.

This is going to further accelerate as India is also becoming a testbed for new automotive, consumer appliance, and medical equipment products for emerging markets. Many global leaders in these areas are now looking at design, development, and field testing of new products that will then be taken to other emerging markets. With all these products becoming more intelligent, semiconductors are playing an increasingly important role in them. This is good news for the Indian design industry.

Action Slows Down
Last year, however, did not see too much action in terms of new design centers being set up or too much of expansion in the captive design centers. However, the complexity of designs being done out of India has increased and also the value chain has expanded from product specification and architecture stage to integration at customer site and support. Thus, the Indian semiconductor design houses have been increasingly contributing in SoC designs in both VLSI and embedded SW domains now. The challenge is in getting the right design, and cost and performance optimization.

Companies like NXP Semiconductors designed and developed very complex platform based system solutions in digital TV, set-top box and automotive infotainment application domains for a number of global customers last year. This included 65nm and 45nm front-end and physical VLSI design, embedded software (middle ware, application layers, protocol stacks, etc). NXP has also designed contact-less smart card and RFID solutions for India specific applications.

Meanwhile, some of the key performance highlights for Freescale in India on design front relates to its design of MCF5225x MCU (Kirin3)a 32-bit microcontroller family with multiple connectivity options (on-chip USB, Ethernet, CAN and encryption) that is ideal for industrial networking, building, lighting control, and medical applications that require high performance and connectivity options. It also developed the MC9S08LG32 series of microcontrollers. It is one such product family from Freescale, which caters to an ever increasing demand for enhanced performance at low cost. This product line marks an important milestone to address the needs of emerging markets. Freescale also introduced a comprehensive, solution based approach to help networking and communications customers speed and simplify their migration to multicore processors. The VortiQa software from Freescaletested, proven, production-ready application-level softwarespecifically optimized to unleash the industry-leading performance of QorIQ and PowerQUICC processors.

Bulk of revenues in FY 09 came from embedded software. A number of vendors across sizes also focused majorly on embedded software. Einfochips is a case in point. It worked on scalable video codecs catering to the requirements of videoconferencing and video surveillance applications by eliminating the need for transcoding to support multiple resolutions. Other big companies like Texas Instruments looked at the domestic market as well. TI looked at verticals like healthcare and worked towards tapping a huge potential in those areas. Cadence meanwhile focused on design forms that can usher in more energy efficiency which emerged as a leading thought over the last year.

In FY 09 predominant workforce was concentrated on the embedded side in tune with the market. IT will continue to remain so, for the near future.

Going Forward
One of the bigger challenges facing the Indian semicon market is the emergence of other low cost geographies in South America and Asia. Hence, how far can India remain competitive in terms of labor has to be seen. But since semcion is closely linked with the manufacturing industry, the current Union Budget is seen as a positive step by associations like ISA. For instance, the budget was positively received by the semicon community as the government has extended STPI tax holiday for technology export firms from March 2010 to March 2011. This would be of special relevance to SMEs. Addressing the issues of transfer pricing and removal of fringe benefit tax were other positive steps. These steps would attract talent to knowledge sector and improve competitiveness of India. Moreover, the weighted deduction of 150% on in-house R&D expenditure available to all manufacturing businesses will provide a boost to domestic R&D efforts and is a welcome move.

The outlook for semicon design looks positive as of now. With global recovery likely by end of this year, it is expected to power new initiatives that will boost semicon design offshoring. Meanwhile, agencies like ISA are doing their bit by launching various initiatives aimed at promoting semiconductor industry in this part of the world.

Shrikanth G
shrikanthg@cybermedia.co.in

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