Foundries in India: The design industry’s future?

With the Indian government finalizing incentives for foundries and related manufacturing units, there is renewed interest in manufacturing in the country. Supporters of the policy argue that having world-class competitive chip fabrication facilities in the country would boost the buoyant IC design industry by making it attractive for global electronic equipment makers to get the entire product (design and manufacturing) done in one place. They also posit that it would help India become a one-stop shop for global ODMs and OEMs targeting end products at the Indian and global markets.

Design companies
“Most designs done in India today are for global products. This could change,” says Dr. Albert Stritter, Vice President & Managing Director, Infineon Technologies India Pvt. Ltd. “There has always been a very strong link between manufacturing process technology and design in the semiconductor industry. The expectation is that the proposed foundries in India will work very closely with design companies throughout the product design process,” he points out. Ganesh Guruswamy, Country Manager and Director, Freescale Semiconductor India Pvt Ltd explains, “With electronics consumption in India set grow, the next logical step for the ecosystem would be to manufacture products locally and eventually source the components locally—mirroring global trends on the evolution of electronics and semiconductor ecosystem.” Infineon Technologies has signed a Memorandum of Understanding (MoU) with Hindustan Semiconductor Manufacturing Corporation (HSMC) to license its 130nm CMOS basic process technology, along with its process technologies for radio frequency, embedded flash for chip card applications, and embedded flash for automotive applications. Infineon will also license its fully qualified and product-proven design libraries to enable quicker ramp-up of products at HSMC.

A Vasudevan, Vice President for Semiconductor and Systems Solutions at Wipro Technologies agrees that the arrival of local fabrication facilities would have a significant impact on the local design industry. “With easier access to manufacturing, we could see a spurt in ‘Made in India’ products not only targeted at the local markets but other countries as well. The design industry would gain from the proximity to foundries and associated facilities (test & packaging).” Amitava Nath, General Manager, Product Design Services, Tata Elxsi, concurs that a fab facility in India will enhance design capabilities, and enable local design companies become more competitive at the appropriate technology node. Guruswamy believes that “By manufacturing chips in India we can provide end-to-end services to our customers and move up the value chain to compete with other countries.”

Challenges
On the challenges that local foundries would have to overcome to establish themselves, Dr. Reddy Penumalli, Managing Director, Analog Devices India (ADI) says, “While technology leadership and innovation is important, all the foundry proposals are predicated on acquiring technology from a global technology partner. Initially, this could be fine but in the long run these foundries would also have to establish themselves as leaders in technology. This will be a challenge.” Stritter believes that the new local foundries would have to make a major effort to ramp up. “The process will take committed technologists, investors and experience. The fabs would also need to secure adequate capacity loading commitments—and need to prove themselves against global competitors in terms of cost, quality and support to their chip-design customers,” Stritter points out. Pratul Shroff, CEO of eInfochips Ltd alludes to the looming manpower problem. “The chip fabrication ecosystem is non-existent in India. Unavailability of skilled manpower to operate a fabrication facility could become an issue,” he warns.

While the design industry is understandably pleased about the proposed semiconductor fabrication facilities, the big question is whether these new projects will be successful. Sailesh Chittipeddi, Senior Vice President, Global Operations at Conexant Systems Inc., points out that success would depend on three factors: the process technology node the foundries offer, the modeling and kit support they can provide to the customer base, and the availability of 3rd party IP around the process technology node being used. “If the foundries are not on the leading-edge, and are licensing an IDM’s process technology (and do not belong to one of the two major foundry camps), it is unlikely they will have a major impact in the short-term,” he feels. But, he hastens to add, the prospects are not outright gloomy. “Over the longer-term as the foundry model in India matures, I expect this will change, and the ability to support the burgeoning design capabilities would likely necessitate a stronger tie between the design houses and fabs at the more advanced process technology nodes. The foundries are likely to partner with one of the two major foundry camps to engage with a diverse customer base,” Chittipeddi predicts.

Indian foundaries
Would leading companies like ADI and Conexant consider using the services of the proposed Indian foundries? Penumalli says if the technology/service offering is world class and competitive then, “companies like ours would seriously consider using the foundry services here.” Chittipeddi explains the factors that would motivate Conexant to opt for Indian foundries (over other global alternatives) for rendering designs in silicon. “It is all about cost per function per sq mm of silicon. If India foundries can be more cost-effective at manufacturing and offer non-proprietary process technologies with good modeling and kit support, and a base of commonly reusable IP around its process technology, it would help.”

Chittipeddi believes that the proposed foundries could play a key role in making available library and IP offerings that will nurture the chip design environment in India. In turn, this could make the local design industry more globally competitive. Vasudevan of Wipro anticipates that the increased design starts and subsequent products manufactured would bolster the revenue growth for the domestic design industry and enhance intellectual capital. He is also optimistic that design houses would be able to collaborate on PCM (process control monitor) results and IC qualification reports to reduce cycle times, and benefit from free shuttle runs.

Finally, Chittipeddi has some sage advice for the incipient Indian foundry industry. “Avoid the pitfalls of a ‘me too’ mindset where cost is the only differentiator—find a value proposition around extensively available and reusable 3rd party IP and process technologies to succeed.”


Click here for illustrations:

Figure 1