Indian semicon industry

Our telecom and IT minister, Hon’ble Dayanidhi Maran resigned late last week. It prompted a friend to ask me whether this move would derail India’s semicon policy and the path the industry had taken.

Of course not! We’ve made a good start, and there’s still some way to go. The former minister has put us on a good path and the Indian semiconductor industry has been taking the right steps to figure among the top nations soon.

Take a look at some statistics. According to the India Semiconductor Association (ISA), India’s total semiconductor consumption in 2005 was about US $2.8 billion, met chiefly through imports. This demand is likely to exceed US $36 billion by 2015.

Electronics — whether it is office automation, consumer electronics, medical electronics, telecom or industrial automation, will require more of the semiconductor industry in India.

The major end user segments have been communications, IT and consumer electronics. Together, the important product sub-categories that would drive the semiconductor market in India are mobile handsets, wireless equipment, especially BTS equipment, which is gaining momentum, set-top boxes, and smart card terminals.

With its growing middle class population of nearly 400 million people which will only increase over time, India’s electronic equipment consumption which was estimated at around US $28.2 billion in 2005, is likely to reach US $363 billion by 2015 growing at around CAGR 30 percent. The Indian electronics equipment domestic production was US $10.99 billion in 2005 and projects an opportunity to touch US $155 billion in 2015.

Statistically speaking, the Indian semiconductor design industry, comprising of VLSI design, board design and embedded software companies, has 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 19 of the top 25 semiconductor companies are already present here as of early May 2005.

The Indian semiconductor design industry (i.e. VLSI, hardware/board, embedded software) had a turnover of US $3.2 billion in 2005 with an engineering workforce of around 75,000. It is estimated to reach US $43 billion by 2015 and provide jobs to 780,000 professionals with a CAGR of around 30 percent for this period.

The ISA-EY Benchmarking Study 2007 benchmarks the semiconductor design sector in India with peer countries on factors of importance to the sector and identifies important high level focus areas and actions to facilitate sustainable growth. Peer countries are Canada, China, Czech Republic, India, Israel, Taiwan, UK and the USA.

Some of the main findings that clearly position as India as an attractive design hub are:

* Availability and scalability of talent
* Quality of talent
* Quality of technical education
* Talent cost advantage

The increased flow of international companies setting up their offshore design and development base and the ramping up of engineering human resource in the existing set up, including the non-captive companies is expected to drive the revenues for the total design market in India.