Semi-rich States

Call it a sign of good times or a healthy race to progress-Indian
states are now fighting with each other to woo the big guns from the
semiconductor industry. The Indian semiconductor design industry has design
companies across Bangalore, the National Capital Region (NCR), Hyderabad,
Chennai, Pune, Ahmedabad, and Goa.

Interestingly, communist states like West Bengal and Kerala have
joined the bandwagon of southern states like Karnataka, Andhra Pradesh, and
Tamil Nadu to clinch the maximum investment from the semiconductor industry.

"It is encouraging to see how some of the states have taken
to the semiconductor industry," says Pradip K Dutta, member of the
executive council, ISA. "These states have realized the value creation a
semiconductor ecosystem brings in. Today, the focus is shifting from a
service-oriented industry to developing a product-oriented industry, because
there is a distinct tangible benefit of having a semiconductor industry. For
every chip designer employed, you will need ten other embedded software guys,
and further ten other applications services providers. So, you are creating
several job opportunities. We all want to see a 'Made In India' tag,"
Pradip says on the incentive of having a semiconductor ecosystem.

Most of these investments are cornered by southern states in
India. In fact, Bangalore is referred to as the software capital of India, and
has overtaken even the Silicon Valley in employing engineers. Over the recent
years, a number of SEZs, proactive policies pursued by central and state
governments, and creation of Software Technological Parks (STPs) have
collectively made India a preferable destination.

How the Cities Fare		Good Fair Poor
Â	Delhi	Mumbai	Kolkata	Bangalore	Hyderabad	Chennai
Knowledge Capital
Operating Costs
Power & Telecom
Transport & Housing				Â
Political Stability, Law & Order and Infrastructure
Health	Â
Work culture
Source: PWC report

Karnataka: King of Chip Design Destination

The country's Silicon Valley, Bangalore, has yet again catapulted India to the
world league of semiconductor designing. The city is home to 70 of the 130 firms
(including multinationals) engaged in chip design in India.

In fact, Bangalore now ranks next only to Silicon Valley in
California, in terms of the number of VLSI engineers working. About 15,000
engineers, who help in designing chips, operate in Bangalore; there are about
20,000 in the Silicon Valley, and a mere 2,000 in Cambridge in the UK, the other
major international chip design hub.

Bangalore has turned into a hub of chip design and Intellectual
Property product development. Multinationals like Texas Instrument, Intel,
Cypress, Infineon, and STMicroelectronics comprising around 70% of the
semiconductor design industry in India, have chosen Bangalore. An MES giant like
Elcoteq has set up its handset-manufacturing unit in the outskirts of the city.

The primary reasons are a large talent pool, proximity to
customers, and outsourcing requirements. That's not all-there are several
start-ups that are competing with large design houses like Wipro, MindTree, TCS,
and Tata Elxsi to grab a pie of the significant semiconductor food chain.

Although infrastructure has taken a beating in Karnataka
compared to its close competitors, the abundant talent pool available is an
encouraging factor. Indian engineers are returning home to manage R&D teams
in Bangalore, and several start-ups have mushroomed in Bangalore, engaging in
not just service oriented work, but high-class innovation in chip designing as
well.

Karnataka may have lost the race to get the country's first
chip fabrication facility, but it is leaving no stone unturned to keep the chips
in place. The state is now keen on retaining prospective investors by developing
the 'Knowledge City', which will have several SEZs for high-end engineering
and manufacturing.

Almost Rs 55,000 crore is being earmarked for the project, which
will be a "plug, play, learn, and live" area. Plans are also afoot to
set up self-contained satellite towns at Nandagudi near Hoskote, Solur on the
Kanakapura Road, Ramanagar, besides one near Nelamangala.

Hyderabad: History Beckons You

When the Andhra Pradesh chief minister, YS Rajasekhara Reddy gave a clarion call
to the semiconductor industry to invest in Hyderabad, history was in the making
for this historical city. Clearly emerging as the semiconductor capital of
India, Hyderabad is the chosen destination for India's first Fab City.

Andhra Pradesh upstaged close contender Karnataka in clinching
the Fab City deal on the grounds of promising world-class infrastructure,
abundant water and power supply, and access to talent pool. The government has
also assured 7,000 MW of additional electricity in two to three years. This $3
bn semiconductor fabrication facility is being developed by SemIndia, a
consortium of investors including the government, which plans to manufacture
advanced semiconductor chips for personal computers, cell phones, set top boxes,
and broadband connectivity.

Hyderabad is often promoted as a low-cost alternative to
Bangalore. Earning a nickname of Cyberabad, the city today boasts of having
several software technology campuses with leading companies such as Infosys,
Microsoft, Oracle, Wipro, GE, iGate, Analog Devices, IBM, Satyam, TCS, Amazon,
and Google. Some leading companies with chip design centers in Hyderabad are
Tundra Semiconductors, AMD, Conexant, Mindspeed Technologies, Cypress
Semiconductors, Xilinx, Renesas Technology, Mentor Graphics, NANO-TECH Silicon
India, and SemIndia.

To make Andhra Pradesh a preferred destination, the state
government has taken up number of initiatives like improvement in quality of
infrastructure, exemption on stamp duty and registration charges, increase in
the number of sports facilities, medical centers, gas stations, nursery and
shopping malls, and state-of-the-art international airport to be opened in March
2008.

The development of the Indian Institute of Information
Technology (IIIT) by the state government in association with Microsoft, Oracle,
Satyam Computers, and Metamor Graphics is yet another spoke in the wheel, adding
strength to the city's advantage in terms of IT education in the country.

Chennai: Over China

Chennai's emergence as the manufacturing hub-more specifically in the
electronic manufacturing arena-has been an envious fact. Chennai has been 11%
more cost-effective to do business than Shenzen in China.

With positive signs like these, the state government is leaving
no stone unturned in its effort to provide a seamless and quick support to the
interested companies. Some leading companies with design centers in Chennai are
Texas Instruments, Xambala, Scolis Technologies, and Atheros Communications.

According to a government source, for every MoU being signed,
there are at least three more in the pipeline. There will be a greenfield
airport project coming up to further add impetus to development.

In his presentation to over thirty semiconductor companies
during a summit in Hyderabad, the IT secretary of Tamil Nadu, Chandramouli said
that Tamil Nadu ranked highest in skilled manpower in the country. "Tamil
Nadu offers you the lowest manpower costs in India, and cost of living is lower
in Chennai than other competing locations. What's more, the state is proud of
its peaceful labor climate," he elaborated.

Among some projects already shaping up is the SEZ being set up
by SPEL Semiconductor to promote electronic hardware manufacturing. SPEL is the
country's first and only semiconductor integrated circuit (IC) assembly and
test facility. SPEL ICs are used globally in consumer electronic applications
such as cell phones, desktop PCs, notebook computers, automobiles, and digital
cameras. The SEZ will come up on a 25.2 acre land adjacent to its plant at
Marimalainagar. It is expected to attract investment in excess of Rs 2,000 crore.

Last November, Samsung India Electronics completed an MoU with
the government of Tamil Nadu to set up a second manufacturing complex in
Sriperumbudur, Chennai, to cater to the fast growing requirements for the
company's consumer electronics products in India.

Bengal: Second to None

Early this year when Debesh Das, IT minister of West Bengal, took the podium at
the 20th International Conference on VLSI design and embedded systems in
Bangalore, little could he have imagined the impact of his presentation.
Attempting to woo around thirty semiconductor companies, Das talked of his plans
for setting up a semiconductor ecosystem in the state, second to none. The flow
of investments hasn't stopped since then.

The state has been chosen for Rs 400 crore worth India Chip
Design Center. The India Design Center proposes to have 14-18 floors, housing a
research lab, training center, an incubation center, and several VLSI companies.
Many of these companies require expensive software packages, the costs of which
run into crores. So, the state government has earmarked Rs 15 crore as venture
capital for start-ups.

In April this year, Xenitis announced seven projects in West
Bengal including a component-manufacturing unit, a first Sino-Indian joint
venture in hardware. This will have a capacity of 9,00,000 units per month.
Xenitis will also be manufacturing handsets in West Bengal.

If that's not all, Videocon Industries too joined the
bandwagon with its intentions of setting up a semiconductor
design-cum-fabrication complex near Kolkata at an initial investment of Rs 2,500
crore. The proposed semiconductor design-cum-fabrication facility, meanwhile,
will incorporate R&D, training, incubation, and commercial activities under
one complex. Spread over 100 acres of land, the complex will specifically focus
on thin film transistor technology.

In order to satisfy the investors, the West Bengal government
has taken up several initiatives like provision for research grants in the
forthcoming state budget, close collaboration with IIT-Kharagpur to ensure the
ecosystem is built. And not just that-it is going one step further, providing
necessary software licenses to such companies, since they need significant
investment which early stage companies cannot afford are among the many things
that the state is doing to make it conducive for semiconductor companies to set
up in the state.

IIT-Kharagpur has already undertaken a research project for
semiconductor manufacturing to create a readily available talent pool for the
companies. A concept plan is being prepared by IIT-Kharagpur to suggest measures
to attract the chip design industry.

Kerala: Class Apart

Following in the footsteps of the Left government in Bengal, the LDF government
in Kerala has also begun presenting its case to attract semiconductor related
investments. The state would become the first in India by announcing a separate
policy for the semiconductor sector shortly, which points to the fact that the
government is focused on attracting investment in design and development.

Besides Thiruvananthapuram, Cochin is being projected as the
next best IT destination in the state. Kerala too promises an English-speaking
talented set of engineers who have so far been pursuing careers in neighboring
states.

The state has shown keen interest in a tie-up with Amer-Asia
Investment, a joint American-Taiwanese consortium, to initiate a massive project
worth Rs 8,000 crore to design and fabricate semiconductor devices and computer
chips in Kerala. The project, which has the potential to create 80,000 jobs in
the state, would mark a milestone in the history of Kerala's industrial
development.

The state is also sending its faculty to IIT-Mumbai for training
to permeate better quality teaching and would shortly be setting up two self
contained cities in the state.

Chips on India's Horizon

In the North too, there are a bunch of VLSI companies like Cadence,
Freescale, Mentor, and ST, who have been in the NCR (Delhi, Noida, Gurgaon, etc)
for nearly a decade now. Some companies with design centers in Pune are
eInfochips, Conexant, NiTal, Sasken, Tensilica, nVidia, and Wipro.

The Indian horizon seems to be gripped by a semi-fever. Each of
the states provide lucrative benefits of setting up chip facilities, one that is
already showing results. Many are even going to great lengths to meet the 'wish-list'
of the semiconductor companies. In all, it's a win-win situation for both the
state machinery and the industry.