Operational and cost benefits of Indian foundries

You walk out of the beach and tend to shake the sand stuck on your feet and yet today, representing a billion dollar industry it is the sand sitting at the heart of your computer, mobile phone or DVD player that makes it all work. The miracle chamber that would make this happen is a foundry of microelectronics with estimated cost of setting one up running to excess of a billion dollars.

Foundries house equipments that value no lesser than a few million dollars with the “clean room” facing requirements tagged with near to zero margin of error. With the design house driving one end of the channel, exhaustive testing at the wafer, die and chip level completes the other end along with packaging. In India, where majority of the companies in this segment operate in fabless mode, the impact of setting up local foundries will have a remarkable impact on the way these design companies operate. It will help to build an ecosystem devoid of import and export constraints. With market demand for consumer electronics touching 2.8 billion dollars in India, the demand percentage also continues to rise steeply. This trend greatly influences manufacturing companies to move into India and set up local foundries. This in turn drives the need for creating other elements of the ecosystem.

Demand-supply gap
It makes a whole lot of sense to locally set up a foundry as manufacturing done closer to the area of demand helps to zero-in on the demand-supply gap. This ensures effective supply chain management and lesser costs arising due to transportation.

Foundries set up in a place where there is a growing market demand aids better business models to be built and implemented. On the costing benefits, we no longer need to speak in terms of dollars but rather in rupees. Thereby a marked difference is seen when it comes to operational and acquisition costs. An additional cost arising due to imports shall not prevail adding to the cost benefits. The chain continues in a smoother and quicker manner. Since these local foundries will not sell finished IC-products into the supply channel they will never compete directly with its fabless customers. This obviates a common concern of fabless companies. Also, these foundries can scale production capacity to a customer's needs, offering low-quantity shuttle services in addition to full-scale production lines.

IDM (Integrated Device Manufacturers) merchants mandate their customers to use proprietary (non-portable) development tools. These foundries now could offer "COT-flow" (customer owned tooling) based on industry-standard EDA systems. This gives a tremendous advantage in terms of complete control over the design process, from concept to final design. Also in terms of utilization, tight scheduling coming in from several fabless companies shall keep the rates going high operating the foundry in a profitable mode.

Sharing expenditures
As several fabless companies shall be associated with one foundry the research and design expenditures gets split amongst them. And when these foundries are present locally, design libraries are set up too, where abreast info about the manufacturing processes that goes into the foundry is documented. This builds the interaction between the fab and the fabless. The customers of these fabs can understand the processes that happen and work more closely with them to tackle common design challenges that the industry faces today before the prototype design gets translated into a silicon chip. The optimal solution for challenges that arises in producing complex SOC designs arises more often due to this interaction. This greatly reduces development cycles and associated engineering costs. Overall, setting up of a local foundry automatically builds a complete ecosystem by bringing in the creation of fabless companies, testing and packaging facilities & OEM/ODMs.

New approaches
Companies like Sasken take on many new approaches to SOC design and implementation each one searching for the right combination of performance, cost and design-cycle time. The setting up of local foundries can help validate these approaches quickening the turnaround time of the prototype. With companies continuously spending time and money on training and building expertise in some of the key areas, such as low power management signal integrity, high speed design issues, not only in functionality but also in silicon implementations, they could benefit by working closely with the foundries.

One other area benefiting a fabless company is when it interacts with the foundry to develop design libraries and collaterals for realizing newer and more advanced technologies such as 60nm and 45nm and help in optimizing the same libraries in several perspectives of cost, performance or power.

As more fabless companies enter the field of microelectronics design and optimization, prototyping newer features into the chip seems to be a constant challenge that these companies face. Also, with India having many start-up companies whose individual demands can’t meet up to the minimum order requirement of a foundry at a reasonable cost. When such companies join forces with locally set up foundries it paves the way for successful shuttle runs yielding desired specifications in quicker time at a reasonable cost.

While setting up a local foundry is a cost intensive and technically challenging process, such set ups shall help build an ecosystem and create an aura that would drive innovation.