Guest Column: ISA: Lofty Heights

To promote the semiconductor industry in India, India
Semiconductor Association (ISA) was formed in November 2004. Our vision is 'To
establish India as the preferred global hub for excellence in creation of
semiconductor products through technology leadership'.

In a short span of time, now ISA has more than 125 members
and is a vibrant industry association with a balanced mix of MNCs and Indian
companies, startups and well established organizations, design services
organizations, and product companies.

Major Findings

In February 2006, ISA released its most comprehensive and
first of the kind report on the Semiconductor Industry ISA-F&S Report. It
provided growth, trends and forecast on the Indian semiconductor market as well
as designs. Major findings include:

Janakiraman S

chairman, ISA

• Semiconductor and embedded software design market was at
  $3.25 bn in 2005, growing into $43.07 bn in 2015
• Electronic equipment consumption was at $28 bn in 2005,
  growing into $363 bn in 2015
• Domestic production of electronic equipment was at $10.99 bn in 2005, growing into $155 bn in 2015
• India to consume 6.5% of worldwide semiconductor production
  by 2015

Of the above, the major challenge for India is the domestic
electronic production, growing from $10.99 bn in 2005 to $155 bn in 2015. That
needs the whole manufacturing ecosystem to fall in place.

The high volume opportunity of domestic production of
electronic equipment should be leveraged and matched by the semiconductor
fabrication eco-system which is near nil today.

Significant Boost

Manufacturing of electronics equipment has seen remarkable progress
in the last eighteen months with Nokia, Motorola, Flextronics, and Foxconn
investing in India. This gives us enormous confidence if the pace of investments
is sustained.

The Government of India has, for the first time, come out
with an exclusive policy for the semiconductor industry that will provide a
significant boost to the manufacturing sector. ISA had closely worked with the
Indian government in structuring the policy to meet the expectations of the
industry while protecting the county interest in terms of right size
investments, leveraging latest technologies.

The policy will create significant positive impact for the
semiconductor sector. Issues to tackle in manufacturing include making
investment procedures simple and viable, improving infrastructure, and
showcasing the first few major wins for the country. If the recent thrust and
investment in electronic equipment manufacturing spills over into the
semiconductor fabrication, test and packaging, making India viable in the
semiconductor manufacturing is not far away.

Releasing the Benchmark

ISA has launched a research update with F&S on this report and
will have its latest release in July '07 tracking and validating the progress
forecaste in the earlier report.

In February 2007, ISA released the ISA-E&Y benchmarking study
on country competitiveness of India in the global semiconductor design
ecosystem. This was again the first of its kind and most comprehensive report.
Major findings include:

• India was benchmarked with competing countries on ten
  parameters. Of that the respondents felt quality of talent, availability of
  talent, quality of technical education, legal/IP regime, and talent cost
  advantage were the most important parameters
• Of the top five parameters, India scored as #1 on
  availability and cost of talent closely followed by China, #4 on quality of
  talent with USA, the UK, and Israel leading us with China being at #8 in the
  list; #5 on quality of technical education with the US, Canada, the UK, and
  Israel leading us with China being at #7; and on IP protection India is in #6
  with China being at #8
• The ISA-E&Y report recommends India to retain its strength
  of talent availability and cost advantage in the context of high growth
  predictions of this industry and invest in research, enhance quality of
  education, increase patent filing while tightening the legal system in IP
  protection.

Need for Improvement

India needs to improve the quality and specialization of skills in
the semiconductor design space to meet the high growth and demand of the
industry. ISA is enhancing its collaboration with academia to improve the
content and quality of teaching as well as the level of research in this space.
ISA will recognize contributors to the innovation in the semiconductor sector
through its technovation awards. This will again be the first of its kind in
India establishing role models for the rest. We already see many of the highly
skilled Indians returning home to pursue careers in India. In addition, India
needs a dedicated research institute that focuses on this industry.

There is clear interest by all leading IDMs as well as Fables
Semiconductor companies in looking at India as a destination for complex design
sourcing as well as increasing their market share in the growing market. Total
number of design started in 2005 was estimated to be at 320 and is likely to
increase to 1,075 by year 2015. As die size keeps shrinking, design and
manufacturing will get more interdependent and have to work together.

Rightly Positioned

Most innovations in the electronics sector start at the
silicon level, be it an automotive navigation system or high definition TV
(HDTV) or wireless broadband like WiMax. They get further aided with the
software written over them leading to innovative electronics subsystems and
applications that leverage those to ease the life of enterprises and consumers.
India is rightly positioned to leverage its might in software complemented
through the ability to design complex silicon.

For every IC designer, the industry needs five engineers to
write embedded software and fifty engineers to write application potentially
serving millions of end users. No other industry other than semiconductors can
create the kind of ripple effect in employment creation as well as addressing
huge global client base. Economic growth of India and the growing appetite of
the middle class population provide a huge market within India to test newer
innovations. What Japan, Korea, and Taiwan have achieved in the earlier decades
can also be achieved by India utilizing its resources in the semiconductor
design space.

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