India – the design powerhouse

The semiconductor industry in India has come a long way from the early eighties when a few companies set up India Design Centers to offshore non-critical design work to India. Over the past 20 years, we have seen India emerge as a force to reckon with in design and development of chip, package, board, and embedded software.

Today, we have a thriving ecosystem consisting of major integrated device manufacturers (IDM), IP providers, electronic design automation (EDA) companies, design services firms, electronic manufacturing services (EMS) providers and original equipment manufacturers (OEMs). The industry can now be viewed as three intersecting sub-ecosystems in “design”, “product definition”, and “manufacturing”.

The design sub-ecosystem
India’s strength in semiconductor and embedded design is recognized globally. The 2008 ISA-IDC report estimates the total design services market in India in 2007 at $6 billion, which is expected to grow at a CAGR of 21.7 percent by 2010. The large and scalable pool of engineering talent, strong ties with Silicon Valley, a business environment with favorable IP laws, and government incentives for STP and SEZs have worked well.

India has proven experience in verification and cutting-edge digital, analog and mixed signal designs. The country’s rapidly developing VLSI and embedded software industry allows companies to efficiently engage in hardware software co-development and verification. An evolved ecosystem, coupled with highly competitive business models offered by design services firms, is helping us own end-to-end design and leverage the local ecosystem to harness time-to-market advantages.

The product definition sub-ecosystem
Further, with the consumptive base in India growing rapidly both at the mid-income segment as well as at the proverbial base-of-the-pyramid, I believe there are tremendous opportunities for Indian entrepreneurs to leverage proximity to this emerging market and innovate to define and build products to address their needs and aspirations.

Market proximity can help designers understand consumer needs better, and manufacturers can experience tremendous productivity and cost benefits. As an emerging market, India’s needs are unique. With 800 million people in rural or semi-urban areas that need to be integrated into the formal economy for India to realize it’s goal of sustained 9+ percent GDP growth over the next couple of decades, there are tremendous challenges and opportunities. It makes business sense for the industry to collaborate more closely to address the needs of this target market and then extend that to other developing economies around the world. There are tremendous opportunities in verticals such as education, entertainment, communication, healthcare, energy, automobiles and consumer.

With OEMs setting up shop in India, their EMS partners have followed. Recent momentum in India’s EMS and original design manufacturing (ODM) industry suggests these companies are building electronic equipment for OEMs for the Indian market. Clearly, India’s electronics ecosystem is gearing to meet domestic demand.

The manufacturing sub-ecosystem
With the announcement of the Semiconductor Policy by the Indian government last year, we have observed an increased impetus to the semiconductor and related high-tech electronics manufacturing segment. We have also intercepted another macro trend around clean energy and I expect India to emerge as a global leader in harnessing solar energy over the next several years.

While large, industrial-scale fabs in India may require some more time to take off, we should not discount the momentum seen with ATMP plants and solar fabs. ATMP plants make sense as they enable faster time-to-market and allow companies to pass on cost benefits to consumers. India has also witnessed the mushrooming of several companies investing in solar PV fabs. Solar PV fab activity will help strengthen the ecosystem, infrastructure and manpower that is required for the more resource intensive semiconductor fabs.

India’s strengths
Trends including the continued move to smaller process nodes, consumerization and convergence are creating the challenges of exponentially growing complexity, higher cost per design start and ever-increasing time to market pressures. The industry is responding to these challenges with a greater amount of IP re-use and platform based design approaches with increasing amounts of software. Software is becoming a much greater determinant of the system performance as well as the differentiation in functionality. For example, the mobile handset manufacturers might use the same chip-set and launch multiple models of phones at various price points by changes in the packaging and differentiation in functionality and performance implemented through software.

This is where India can play a key role globally. Already, India is recognized the world over as a software development powerhouse. India’s design services and IP companies have the capability and track record of developing and delivering solutions with hardware and software. Even the MNC IDCs have established large embedded software development teams in India over the past few years.

This brings us to another opportunity for India. Increasing amounts of software has put hardware-software co-development and co-verification on the critical path to the cost and time to market challenges for most companies. Verification has been one of the key challenges for semiconductor companies and now system level verification is becoming one of their biggest focus areas. India has an established and recognized strength in verification going back to the late 1980’s when it all started with a focus on verification. EDA companies, MNC design houses and Indian design services companies have collaborated very effectively to create a positive virtuous cycle in further strengthening this inherent strength over the past several years. Many significant breakthrough innovations in tools, methodologies and verification IP have come out of this collaboration. Coupled with the established expertise in software development, it positions Indian companies very well to exploit these dual strengths to build the designs of tomorrow.

Conclusion
When India made its first forays in IT, BPO and software development in the mid-1980’s it is questionable whether anyone could have predicted the profound impact it would have on the Indian landscape – economic, political and social. Are we at a similar inflection point now, where convergence and complexity can present a host of opportunities for Indian companies? Only time will tell.


Author Information
Jaswinder Ahuja is the Corporate Vice President and Managing Director of Cadence Design Systems (I) Pvt Ltd.