Time for Indian semicon to step up! Yes or No?

I was really happy to see a comment on my blog post: What India now offers to the global semicon industry, left by Tom Morrow, author of the SEMISpice blog, and Vice President of Global Expositions and Marketing, SEMI. Thanks for visiting and commenting, Tom.

You said: Your description of India's Special Incentives Package Schemes for setting up and operating semiconductor fabrication as a "debacle" is off the mark. Is it really wise for the country to join an already crowded semiconductor manufacturing ecosystem when it can apply its scarce resources to join 30-50 year boom in solar, something the country desperately needs for both domestic and export development?"

"The move to solar is the right one. India had nine manufacturers of solar cells and about twice as many module makers. Most of these proposals have been in response to the Government’s announcement of a Special Incentives Package Scheme under the 2007 Semiconductor Policy.

"About 70 percent of India’s solar cell and PV module production has been exported. This is likely to change in the near future as government policy provides the push for PV deployment and following the recent release of guidelines for grid connected solar generation. Several states in India, including Andhra Pradesh, Gujarat, Karnataka, Punjab, Rajasthan and West Bengal have also announced their own solar policies, plans and incentive packages in recent months.

"ISA and SEMI has recognized the great opportunities in solar and have taken supportive leadership positions. While both organizations would love to see a domestic semi fab industry emerge in India, given the overcapcity in the industry today, the transition to solar has been swift, thoughtful, and right on the mark."

First up, Tom, I did not formulate SIPS or the Indian semicon policy! I too thought India would soon build a wafer IC fab! Several delegations have visited India, in the past, with companies hoping to work with these so-called wafer IC fabs in India. I am merely a small time blogger, offering my opinions. And I love my country, no less than any other Indian!

Perhaps, you should see some of the press these 'so-called fabs' received! All the talk of a wafer IC fab only died down with SemIndia late last year!

If folks read my posts carefully, I've discussed how India has been doing fine before the semicon policy and post the policy, fab or no fab! Some knowledgeable experts have even said that fabless India shines brightly! It has shone before, and continues to do so!

Neither do I have anything against solar and the solar industry! It is a great way to trigger off manufacturing in India. Did I say otherwise?

I work closely with ISA, in fact, was present, when ISA was born, back in October 2004, and also know Sathya Prasad at SEMI India quite well. It's a great initiative that's going on in solar in this country. So, yes, the move to solar is a very correct one!

Still on wafer IC fabs, one expert even goes on to say that India could look at skipping the current node of technology and make an entry into the one that will be prevalent after few years.

However, my focus is essentially on semiconductor manufacturing! As many industry experts never fail to say at conferences, India needs to move up the semicon value chain! We need more semicon product start-ups!! And, that's not happening fast enough!

Perhaps, we can just discard all of these ideas and go on being a leading player in design services (which, we already are), a much easier option.

I would still go with what Malcolm Penn of Future Horizons' says, that India needs to re-think its semiconductor strategy! It cannot survive on chip design alone!

Even the recently held ISA Vision Summit had a session: Indian design influence: Ideas to volume! Speakers discussed how India should seize opportunities, especially in this downturn, and that, it is time for the Indian semiconductor industry to step up, put the right innovations in place and grow.

I am very interested in hosting an event in India on this topic -- Time for India to step up: Put right innovations in place and grow! However, as I said, I am merely a small time blogger, trying to make a living. I hope I can find some support to host such an event at least once in India.

I am simply delighted that my post has drawn the interest of such a senior person at SEMI. Thank you, sir!

What India brings to the table for semicon world! And, for Japan

This semicon blog's title has been inspired by some queries, largely from friends in Japan, who are looking at the Indian semiconductor market. The topic of great global (and Japanese) interest is: What does India bring to the table for the semicon world to go to India!

Interesting! The world has been keenly following the Indian semiconductor and fab policy, and can gather a lot of information off my blog itself! For those who'd like to know it all again in specifics, here we go again!

Indian semicon and fab policy
Around September last year, the Department of Information Technology, Ministry of Communication and IT, Government of India, came up with the Special Incentive Package Scheme (SIPS) to encourage investments for setting up semicon fabs, and other micro and nanotechnology manufacturing industries in India!

The "ecosystem units" have been clearly defined as units, other than a fab unit, for manufacture of semiconductors, displays, including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; solar cells; photovoltaics; other advanced micro and nanotechnology products; and assembly and test of all the above products.

What has happened since?
Lots! Initially, there were two major proposals from HSMC and SemIndia for setting up wafer IC fabs. While those haven't really taken off yet, more investments have since happened in India.

Quite recently, the Indian semiconductor and fab policy attracted 12 major proposals, worth a whopping Rs. 93,000 crores! The Department of Information Technology (DIT), Government of India, has set up a panel of technical experts to evaluate these proposals.

Ten (10) of these proposals are for solar/PV. One is for a semiconductor wafer -- from Reliance Industries worth Rs. 18,521 crores, and another for TFT LCD flat panels -- from Videocon Industries, worth Rs. 8,000 crores.

The 10 proposals for solar/PV are from: KSK Surya (Rs. 3,211 crores), Lanco Solar (Rs. 12,938 crores), PV Technologies India (Rs. 6,000 crores), Phoenix Solar India (Rs. 1,200 crores), Reliance Industries (Rs. 11,631 crores), Signet Solar Inc. (Rs. 9,672 crores), Solar Semiconductor (Rs. 11,821 crores), TF Solar Power (Rs. 2,348 crores), Tata BP Solar India (Rs. 1,692.80 crores), and Titan Energy System (Rs. 5,880.58 crores). This is as far the latest developments are concerned!

Solar fabs have also been announced earlier by leading firms such as Videocon, Reliance and Moser Baer, etc. (Two of them are figuring here again!) There are also talks about developing solar farms in India, which is good.

What are India's strengths?
The clear strengths of the Indian semiconductor industry are embedded and design services! We are NOT YET into product development, but one sincerely hopes that it gathers pace.

The market drivers in India are mobile phone services, IT services/BPO, automobiles and IT hardware. India is also very strong in design tools, system architecture and VLSI design, has quite strong IP protection laws, and is reasonably strong in concept/innovation in semiconductors.

Testing and packaging are in a nascent stage. India will certainly have more of ATMP facilities. Nearly every single semicon giant has an India presence! That should indicate the amount of interest the outside world has on India. In fact, I am told, some key decisions are now made out of the Bangalore based outfits!

Electronics manufacturing
In the electronics manufacturing domain, India's strength lies in hardware, embedded software and industrial design, OEMs, component distribution (includes semiconductor and box build), and end user/distribution channel, as well as more than moderate strength in product design and manufacturing (ODM, EMS).

India is likely to witness $363 billion of equipment consumption and $155 billion of domestic production by 2015. India's electronic equipment consumption in 2005 was 1.8 percent. It is likely to grow to 5.5 percent in 2010 and 11 percent in 2015, as per a joint study conducted by the ISA and Frost & Sullivan.

The Indian semiconductor TAM (total available market) revenue is likely to grow by 2.5 times while the TM (total market) is likely to double revenues in 2009. The TAM is likely to grow at a CAGR of 35.8 percent and the TM is likely to grow at a CAGR of 26.7 percent, respectively, during the period 2006-09.

Telecom, and IT and office automation are the leading segments in TM and TAM. Consumer segment occupies the third fastest growing area in the TM, and the industrial segment is the third fastest growing area in the TAM.

The major semiconductor categories of interest include microprocessors, analog, memory, discretes and ASICs, while the major end use products include mobile handsets, BTS, desktops, notebooks, set-top boxes and CRT TVs.

India, the embedded superstar!
India's embedded design industry has been going from strength to strength. An IDC-ISA report forecasts the revenues from India's VLSI, board design and embedded software industry to grow to $10.96bn by 2010 from the current $6.08bn in 2007.

India is also focusing on moving up the semiconductor value chain. It is emphasizing on end-to-end product development, investing in IP development, developing India specific products, and partnering with OEMs to understand the market needs. Also, be aware that several leading EMS firms are present in India as well.

What should investors do?
Certainly, invest in India! The Indian semicon policy clearly defines the "ecosystem units." Global manufacturers of displays, including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; including SSDs, solar cells; photovoltaics; other advanced micro and nanotechnology products, should certainly look at investing in India, and consider manufacturing here!

Lots of solar fabs are likely to come up, so there will be a great demand for solar related equipment, chemicals, testing, etc. We hope that one wafer IC fab comes up as well, so there will be opportunity for semicon equipment manufacturers. However, do be prepared to wait as things may not move as fast as some may expect.

There is lot of opportunity for fabless companies and in ATMP as well. There are several Indian firms, small ones, who may be interested in partnering. Some trading companies may find India of interest, especially in the solar/PV and ATMP segments.

Keep an eye on the IT/semicon policies some states, especially, Karnataka have in store. A host of opportunities could become available, once Karnataka comes up with a policy. More states may follow suit!

Well, do contact me in case you need further assistance.

Indian fab policy gets 12 proposals; solar dominates

Just about 10 odd days ago, I had blogged about building-integrated photovoltaics (BIPV)! I had also mentioned how solar/PV will be the next big story in India, with BIPV right up there at the very top!

Well, according to a published report on India Infoline, the Indian semiconductor and fab policy has attracted 12 major proposals, worth a whopping Rs. 93,000 crores!

A Press Information Bureau (PIB) release says that the Department of Information Technology (DIT), Government of India, has set up a panel of technical experts to evaluate the proposals.

The promoters will come up to the Appraisal Committee for sanction of subsidy under the scheme once they have reached the threshold limit of investment, as indicated in the guidelines of the Special Incentive Package Scheme.

A majority of these proposals -- ten (10) -- are for solar/PV. One proposal is for a semiconductor wafer -- from Reliance Industries worth Rs. 18,521 crores, and another for TFT LCD flat panels -- from Videocon Industries, worth Rs. 8,000 crores.

The 10 proposals for solar/PV are from: KSK Surya (Rs. 3,211 crores), Lanco Solar (Rs. 12,938 crores), PV Technologies India (Rs. 6,000 crores), Phoenix Solar India (Rs. 1,200 crores), Reliance Industries (Rs. 11,631 crores), Signet Solar Inc. (Rs. 9,672 crores), Solar Semiconductor (Rs. 11,821 crores), TF Solar Power (Rs. 2,348 crores), Tata BP Solar India (Rs. 1,692.80 crores), and Titan Energy System (Rs. 5,880.58 crores).

Does the Indian solar/PV story now start making some sense? It is very much in line to become the next big success story for India after the Indian telecom story!

Evidently, Reliance Industries is the major player in all of this, having proposed both a semicon wafer fab as well as a solar/PV fab. Lanco Solar, Solar Semiconductor, Signet Solar, Videocon, and PV Technologies are some of the other big players proposing to enter the Indian semiconductor/fab space.

Well, this is really great news for the Indian semiconductor industry! Further, it comes close on the heels of the announcement of the 3G spectrum policy and MNP policy by the government of India.

A few weeks ago, Dr. Madhusudan V. Atre, president, Applied Materials India, had mentioned that taking the solar/PV route was perhaps, a practical route for India to enter manufacturing. How true are those words!

Late June, I too had proposed, among others points, that Karnataka (and other Indian states) look at having some solar/PV fabs.

Dr. Pradip K. Dutta, Corporate Vice President & Managing Director, Synopsys (India) Pvt Ltd had also mentioned late June that it was too early to write off the Indian fab story. We now have the answer to that question of having fabs in India!

All of this should also excite those investors looking to enter India. The huge interest and subsequent proposals for solar/PV can also lead to India having some of its own solar farms as well!

The India Semiconductor Association should be congratulated for having made this happen. It is soon going to a year since the Indian government had announced the semiconductor policy. Now, with these mega proposals in place, maybe, we will see more investors in the Indian semicon and solar/PV fab spaces.

Top 10 Indian semicon companies review
Another interesting thought! Last year, around this time, I had prepared a list of the Top 10 Indian semiconductor companies. This particular blog has been among the most accessed.

Perhaps, a review is in order! Besides, several Indian players are beginning to make a mark, like Cosmic Circuits, SemIndia, etc. The list of August 2007 mostly had Indian design services companies. This feature of Indian design services companies dominating a top 10 list will probably continue for some more time, till all of these proposals bear fruit into concrete, productive fabs.

I am sure, with those mega investments coming into the Indian semicon wafer IC fab and solar/PV fabs, most of the companies would soon figure in any top 10 list!

Surely, 2009 should be quite exciting as all of this means a very positive future and outlook for the Indian semiconductor industry.

10-point program for Karnataka semicon policy

A very interesting question was recently thrown at me: what sort of semiconductor policy should Karnataka adopt as a state! I shall attempt to highlight some of the activities the Karnataka government can look at implementing in the semicon/EMS space.

Let us first go back to last September, when the Indian government issued fab guidelines. Besides wafer IC and solar/PV fabs, the Indian government is seeking investments in ecosystem units for LCDs, OLEDs, PDPs, photovoltaics, solar cells, storage devices, advanced micro and nanotech products, etc.

The 'ecosystem units' have been clearly defined as units, other than a fab unit, for manufacture of semiconductors, displays, including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; solar cells; photovoltaics; other advanced micro and nanotechnology products; and assembly and test of all the above products.

For starters, the Karnataka state needs to have a long-term semiconductor policy in place, running 20-25 years or so. This cannot be a short-term plan! It would be prudent to have the top Indian leaders from Indian firms and MNCs, e.g., Ittiam, MindTree, Synopsys, Cadence, TI, Analog Devices, as well as the Indian Institute of Science and some other leading technology institutes, be the part of a core state semiconductor policy team to oversee the implementations. Future state governments would only need to update the status and keep it rolling forward.

Incentives need to be built in as well, including more tax holidays, etc. Whether it needs to be 25-30 percent or higher, is to be debated. Next, the focus of a semicon policy should be aimed at solving some particular local problem, which can go on to solve a much bigger national problem.

All of this should be done with, keeping in view to improving the infrastructure in the state, such as roads, water, electricity, etc. Foreign investors would shy away if infrastructure issues were not tackled first.

In this context, the Karnataka government should first look at having some solar/PV fabs in the state, as well as those in the nanotech space. Next, it would be prudent to pursue a policy of attracting companies in the verification and testing domains. Rather, have companies in the ATMP space, a pointer, which has been coming up in most of the discussions.

As an example, last year, an Israeli company -- Nova Measuring Instruments -- was keen on entering India. Nova develops, produces, and markets advanced monitoring, measurement and process control systems for the semiconductor manufacturing industry. It should be pursued to start assembly and testing of products in the state.

Wafer IC fabs are going to be a tough act to follow. Unless a company can get the requisite funding for a 300mm fab, it is not advisable to follow that path. However, there is room for developing 200mm fabs, or even 150mm and 180mm fabs. These can be used to develop indigenous and simple applications. If such fabs are developed, those companies offering fab-related services can be attracted as well.

The Indian semicon policy statement speaks about having ecosystem units. It would be advisable to attract smaller companies and look at setting up manufacturing units. As an example, Synopsys's Subhash Bal had once pointed out how RFID can be used in a host of applications. That's not all. Why not pursue companies in the OLEDs/LEDs and PDPs spaces as well, besides those manufacturing LCDs, even if smaller-sized.

Finally, consider attracting and promoting companies in the fabless space, as it looks to be the way ahead for the semiconductor industry.

Here is a 10-point program for the Karnataka government to consider as a likely semiconductor policy.

1. A long-term semiconductor policy running 20-25 years or so.
2. Core team of top Indian leaders from Indian firms and MNCs, as well as technology institutes in Karnataka to oversee policy implementation.
3. Incentives such as government support, including stake in investments, and tax holidays.
4. Strong infrastructure availability and management.
5. Focus on having solar/PV fabs in the state.
6. Consider having 150/180/200mm fabs that tackle local problems via indigenous applications.
7. Develop companies in the assembly testing, verification and packaging (ATMP) space.
8. Attract companies in fields such as RFID, to address local problems and develop local applications.
9. Pursue companies in the PDP, OLED/LED space to set up manufacturing units.
10. Promote and set up more fabless units.

There should be some steps to create specific zones for setting up such units -- for fabs, fabless, ATMP, manufacturing, etc., all spread equally across the state.

On a personal note, I would be keen and willing to work with the Indian/Karnataka government, or the concerned parties, in formulating such a policy, should I am invited. Nothing would give me greater pleasure than seeing India, and Karnataka, shining in the semiconductor space.

Has the Indian silicon wafer fab story gone astray?

The recent news of the Hyderabad Fab City giants -- SemIndia Fab Pvt Ltd and Nano-Tech Silicon India Pvt Ltd -- being served notice by the local state government and to explain the reasons for their delay in setting up the Fab City in Shamshabad on the outskirts of Hyderabad, does not come as a surprise at all!

Setting up of a silicon wafer fab takes up a lot of time and money, and I am not sure how this bit is perceived by many. Also, the rate of return is not exactly immediate! Maybe, it is time for everyone to realize that semiconductor is a very different industry from any other, and there is a need to understand how it really functions! Besides, one needs to keep an eye on the global semiconductor industry and associate movements there with what kind of value would a fab in India bring to the world.

This May, I'd done a reality check on where the global semiconductor is placed. Several folks have contacted me since, pointing out my accuracy. While it is good to be spot on with the assessment of the global (and Indian) semiconductor industry, the assessments should serve as a warning for the global (and Indian) semiconductor industry -- that it is not going to be an easy ride ahead!

On the same note, I had earlier questioned whether this was the right timing for setting up fabs in India. Perhaps, there is a need to examine whether we started on the fab path a bit too late! If we are found to be wrong or hasty in our assessment, let us feel no anguish in accepting that! This is not the first time such a thing will happen in the semiconductor industry, nor will it be the last. Having said that, if a wafer fab or two do start functioning in India later in 2009 or beyond, that would be exemplary!

Let us hope that the Indian silicon wafer fab story does not go astray for the overall benefit of the Indian semiconductor industry. There is a need on part of the Indian semicon planners to integrate clear vision with careful planning.

Yes, several solar fabs are coming up globally, and investments in solar/PV are rising as well in India, but that was along expected lines.

It was also pointed out earlier that investments in photovoltaics (PV) had somewhat eased the pressure on capital equipment makers and spend. In fact, 2007 is now well documented as the year when the PV industry emerged as a key opportunity for the subsystems suppliers and provided a timely boost in sales for those actively addressing this market.

Perhaps, here lies an opportunity for India, and I'm repeating this to the extent of sounding boring!

Further, even though it has been quite a while since the Indian semicon policy was announced, some feel that India should continue to focus on design services and embedded -- its well known strengths, rather than go after something as mature as wafer fabs. We don't have to 'force ourselves to believe' that we are good at product development? We are not!

Yes, like most things, it can change, but that would need great effort on part of all industry stakeholders. The question is: are we ready to bring about that change?