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Carrier Equipment: Semiconductor: New Chip on the Block

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VoicenData Bureau
New Update

The Indian success story of the software and services sector is well known.

But there is another in the making�India�s hardware sector consisting of

semiconductor (chips), VLSI design, and electronics manufacturing is fast

catching up, thanks to the sound ecosystem built over the last two decades.

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Emerging Industry



This is the first time VOICE&DATA has included the semiconductor
industry in V&D100 issue in recognition of its bolstering contribution to the

telecom market. The emerging semicon industry on Indian soil bodes well for the

telecom industry as well. The Indian telecom story has become the stuff legends

are made of with the Indian mobile market being counted as one of the fastest

growing in the world at over 4 mn mobiles bought every month.

With the right ecosystem and major telecom manufacturing companies setting

shops here like Elcoteq, Nokia, and Ericsson to name a few, the semicon industry

in India has a vast greenfield right at its doorstep.

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The semicon industry is at an inflection point in India. The semiconductor

market in the country, which was pegged at $1.6 bn in 2006, is expected to reach

about $2.2 bn in 2007 and $5.5 bn by 2010. The semiconductor policy announced

early in March this year has also given an impetus to the industry�s growth.

Despite the dilution of incentive (from 25-30% to 20%) the policy has brought

cheer by according it SEZ (special economic zone) status, and exempting

countervailing duty (CVD) for non-SEZ entities.

A survey by the Indian Semiconductor Association (ISA) and Frost and Sullivan

(F&S) done last year suggested that India's chip industry could generate a

turnover of $202 bn by 2015, compared with $14.3 bn in 2005, with the potential

to employ some 3.6 mn workers by 2015, against 520,000 workers in 2005. By 2015,

the ISA study indicates, the industry will account for around 12% of the

national GDP.

The Indian Semiconductor Landscape

Sl No

Name of the Company

Core Areas

R&D or Design Center location

1.

AMD India

AMD India Engineering Center is a CoE for advanced VLSI and

software development. Nearly 100 engineers at the AMD Center in Bangalore

are working on the 65 and 45 nm technology and develop embedded products for

handhelds and digital TV, among other products

Bangalore

2.

Analog Devices India

Its design centers primarily focus on products for the

telecommunication space. The Hyderabad center contributes to MPSG-NMP, RF

and wireless and HSNA product lines. The latest offering from ADI is an IF

receiver for cellular base stations to support 3G standards

Bangalore, Hyderabad

3.

Cadence Design Systems

It specializes in developing design automation tools to

address 65 and 45 nm technologies. Cadence offers kits for wired and

wireless networking and multimedia sectors

Noida

4.

EInfochips

Its design centers offer both design IP synthesized IP

cores, and verification IP verification components that includes cores

ranging from UWB (ultrawideband) to Gigabit Ethernet

Two each in Ahmedabad and Pune

5.

Freescale



Semiconductor

Over 600 engineers are engaged in products related to

wireless, mobility, networking, and computing systems among other segments

Noida, Bangalore

6.

Infineon



Technologies India

Over 600 professionals work on technology development in

wireless and wireline communications. The software team works majorly in

areas of mobile phones, VoIP, chip card and security. The hardware team

provides a comprehensive range of communication products and technology

development for 130, 90, and 65 nm process nodes

Bangalore

7.

Intel India

Intel India Design Center has made significant contributions

to Intel�s processor technology based mobile platforms including Centrino

Duo and the latest Centrino mobile platform

Bangalore

8.

Ittiam Systems

The company is singularly focused on DSP Systems and has

competencies in multiple end equipment domains, covering wireless, wireline,

speech/audio, imaging/video

Bangalore

9.

LSI India

The development center works on products for storage,

networking and consumer market. The ASIC R&D team is doing cutting edge work

on 65 nm and IP development. Next generation of DVDR development for tier-1

customer is being developed in India

Bangalore

10.

Mindtree Consulting

MindTree�s R&D services addresses the needs of communication

and wireless with domain expertise in ASIC/SoC design, IP development,

board, system and embedded software development. These include UWB and

Bluetooth wireless technology, echo cancellation and noise reduction

algorithm, and the VoIP protocol

Bangalore

11.

NXP



Semiconductors

Over 700 engineers working on leading-edge technologies in

90- and 65-nm processes, embedded software and systems for communications

sector. The main areas of NXP�s focus from India include digital television,

cellular, multimedia for cellular, connectivity, personal media players,

TVs, set-top boxes, and RFID technologies

Bangalore

12.

Qualcomm

Its Bangalore design center does cutting-edge VLSI chip set

designs, and has rolled out two chip sets. The company plans to launch an

India-specific low-cost chip set for mobile handsets

Bangalore

13.

SiRF Technology

This system solution provider delivers turnkey reference

designs and system software along with its semiconductor products. The

Indian subsidiary, SiRF Technology India, was set up in 2004 with the aim of

starting a 'Center of Excellence'

Noida

14.

Sankalp Semiconductor

It specializes in offering analog and mixed-signal design

and layout services. It is currently working with customers to provide

mixed-signal layout services, including memory layout in 45-nm and RF CMOS

layout in 65-nm technology

Bangalore, Hubli

15.

STMicroelectronics

It employs over 1,650 engineers. The design center in India

has contributed significantly to the development of chip technologies and

products for a number of applications, including set top boxes, multimedia,

imaging, wireless telecommunications, and automotive sectors

Noida, Bangalore

16.

SPEL



Semiconductor

It is the leading one-stop turnkey wafer sort, IC assembly

and test subcon facility in India. As a specialty, SPEL offers onsite and

offshore test engineering support to customers

Chennai

17.

Texas Instruments

TI�s India center has over 1,600 engineers leading work in

designing 90, 65, and 45 nm technologies, products for communications,

wireless and personal electronics, and designs for DSP devices, the

company�s flagship product line. TI India has been awarded the highest

number of patents (225) for any R&D center in India

Bangalore

18.

Tata Elxsi

Tata Elxsi's 2,500 plus strong team provides expertise in

VLSI design, embedded software, networking, telecom, multimedia, and

storage, among other areas

Bangalore, Chennai, Pune, Thiruvananthapuram

19.

Wipro Technologies

The company�s VLSI and systems design team handles projects

in mixed-signal and digital ASIC/SoC, complex FPGA and board designs,

enclosure/chassis designs and core technology IP blocks. The 1,700-member

team is often at the cutting-edge of technology�manipulating more than 40 mn

gate designs, 65 nm geometries, high-end FPGAs and 28-layer boards

Bangalore

20.

Xilinx

The design center has over ninety engineers working mostly

on IP development for telecommunications, consumer electronics, and

automotive applications for worldwide customers

Hyderabad

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Industry Dimensions



Unlike the IT and ITeS sector, the Indian semicon industry is still
young, with just over 200 firms, majority of them multinationals, operating in

VLSI design, embedded systems, and manufacturing.







Highlights
n  The semicon industry revenue is expected to grow to $2.2bn in 2007






n  By 2015, the industry will account for around 12% of the national GDP





n  Focus areas within communications are mobile handsets, wireless, set top
boxes






n  $500 mn to $600 mn funds have already been set up for the Indian


semiconductor sector





n  Key challenges are crunch in


manpower and capital resources








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Over the years, India has made significant technological developments,

particularly in two areas of the semiconductor industry—chip designing and

software development. Thanks to the large base of software engineers and

experts, Indians seem to excel in electronic design automation.

The semicon players are broadly classified into two basic categories—captive

and non-captive. The category 'captive' includes integrated device manufacturing

(IDMs), fabless companies, and OEMs, which would be carrying out chip design for

in-house use. The category 'non-captive' includes service companies that would

provide services to clients, which may be OEMs or IDMs. Large non-captive

companies in India typically have over 500 engineers. Start-ups would typically

tend to have 50 to 100 or a maximum of 200 engineers.

Types of captive companies, such as IDMs and fabless companies, may carry out

design of chip to reference board for in-house consumption. However, some of the

non-captive companies have built capabilities in terms of carrying out chip

design, reference board design, product development, and the embedded software

for that.

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From the activity level, the value chain is defined as system architecture,

logic design and verification, physical design, and testing; followed by silicon

manufacturing services—packaging, assembly, and testing. As of today, companies

in India are in logic design, verification, and physical design.

Catching Up Fast



India already has a strong network of companies doing semiconductor
design, including systems integration, VLSI, hardware and board design, and

embedded software. Looking at the landscape, there are design companies across

Bangalore, NCR Delhi, Hyderabad, Chennai, Pune, Ahmedabad, and Goa. All of the

global top ten fabless design companies also have India operations and nineteen

of the top twenty-five semiconductor companies are already present here as of

early May 2005.

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Among them, Bangalore boasts of over forty-seven VLSI chip design firms,

including biggies such as Motorola, Cypress Semiconductor, IBM, Cisco, Ishoni

Networks, Lucent, and Sun. And inspired by their entry, a number of Indian firms

too have joined the chip design race—Accel, C-DAC, Ittiam Systems, Wipro

Infotech, GPS Usha, Silicon Automation Systems, Tata Elexsi, and Tejas Networks

to name a few.

Almost every major international firm from Texas Instruments to Intel,

Ericsson to IBM to NXP has its R&D or design lab for microprocessors and

applications. At least four groups have confirmed their intentions of setting up

fabrication foundaries or ‘Fabs’ across India.

SemIndia has decided on setting up a plant near Hyderabad in Andhra Pradesh

with microprocessor and logic technology from AMD. The ambitious project, to be

executed in two phases, will have an ATMP (assembly, testing, mark, and

packaging) unit and a fab facility to manufacture chips (wafers) for domestic

and global players, including fabless and integrated device manufacturers.

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The Hindustan Semiconductor Manufacturing (HSMC) plans to set up two

semiconductor manufacturing facilities in India that will manufacture chips on

8-inch wafers and more advanced 12-inch wafers. Infineon Technologies, a global

semiconductor supplier for communications, automobile, security, and industry

applications has signed an MoU with HSMC to license its leading-edge 130 nm CMOS

process technology.

NT Silicon India, a local company with ambitions to move into the lower

reaches of the semiconductor market, is investing $670 mn in an 8-inch

semiconductor fab planned for Hyderabad. Not to be outdone, Nest Technologies, a

software company based in Kerala, recently announced plans to set up a foundry.

Videocon has also thrown its hat in the ring announcing a $250 mn semiconductor

facility in eastern or southern India.

Semiconductor Policy Outline

n  SEZ incentive (in % of Capex) to fab and ecosystem units

is 20%



 


 n  Non-SEZ incentive is 25% plus exemption from CVD


 


 n  Threshold net present value (NPV) of investment for Fab unit is Rs 2,500
crore and Rs 1,000 crore for non-fab units



Vast Opportunities



What’s really driving the market are the major end-use
segments—communications, information technology, and consumer electronics. As an

increasing number of Indians buy PCs or laptops, mobile phones, TVs and set top

boxes, music and entertainment systems, the demand for semiconductor rises.

In a typical telecom product, the average semiconductor content is very high

as compared to consumer electronics or any other category. That is the reason

why a thrust in telecom manufacturing would actually help the semiconductor

market in India to grow to a large extent.

In the communications segment, mobile handset is a large market, which also

offers high volume growth potential. Within the wireless equipment sub-segment

of communications, BTS equipment is gaining momentum. In the consumer

electronics segment, there is a large market for set top boxes in India. Another

high growth potential market is the smart card terminal. Captive MNCs in India

are already carrying out cutting-edge technology work. Companies are designing

ICs with 0.13, 0.09, and 0.065 micron technology.

The industry is focusing on power management for mobile devices, smaller form

factors, and enhancing user experience for voice, data, and video convergence.

Cadence Design Systems has developed common power format (CPF) as part of its

power forward initiative for low-power standardization effort.

Several companies are prominently working on new areas related to mobile

applications, such as interactive games, B2C transactions over the mobile, and

wireless products for OEMs and ODMs, especially for emerging 3G and WiMax

standards.

Manpower Crunch



Indian firms would have to build domain know-how in the semiconductor
sector, and scale up their resources—human as well as capital. The semiconductor

industry has the potential to create more jobs than the software industry in the

long run. However, at its current growth level, the industry will need ten to

twelve times the current manpower level of 65,000 engineers. There is also a

shortage of high caliber faculty in India's technical education system.

The ISA-F&S study has revealed that the industry has 60,000 engineers in

embedded systems, 11,000 in VLSI design, and 5,000 in hardware segment. In terms

of market estimates for the next decade, the industry is projected to grow

ten-fold.

The challenge could reduce in the coming few years through government

initiatives, better collaboration between industry and academia, higher

participation of experienced professionals in training activities, and greater

flexibility in recruitment policies of companies.

Linking Up Telecom Growth



Telecom is a key end-use segment in India; firstly, due to the high
demand for telecom services owing to its strategic importance to the country,

and secondly, it has high semiconductor content.

The global chip design market currently caters mainly to consumer electronics

and some IT areas, but future growth areas will include telecom, wireless,

broadband, automobile, medical equipment, aviation, and Internet appliances

including embedded chips. With the Indian telecom sector growing at an enviable

pace, gear manufacturers, handset makers, and component production companies are

making a beeline to get a share of the market.

In India's telecommunications segment, the manufacturing index was only about

0.07 in 2005. The manufacturing index reflects the extent of manufacturing that

takes place in a particular segment, in a country. The closer the manufacturing

index is to 1, the better is the capacity to meet demand through local

manufacturing. A low telecom-manufacturing index shows that it is a long way

before a major proportion of the demand is met through local manufacturing. By

2015, the ratio is expected to be almost 0.3.

By 2010, communications is anticipated to be the major contributor to

semiconductor consumption. India is poised to have its very own elite

semiconductor ‘eco-system’ moving up the global value chain.

Malovika Rao



malovikar@cybermedia.co.in

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