Bullish run for India chip industry

N JAYALAKSHMI

he chips may have been down for the Indian IT industry, during the last one year. But that has hardly dampened optimism or quelled enthusiastic new ventures. And while statistics teem with layoffs and corporate budget crunches, the IT media continues to abound with buzzwords. The latest, it seems, is chip designing. This should cheer industry watchers, who have been lamenting the focus of the Indian IT industry on software services at the expense of product development and hardware design. Says Girish M, business development manager, Texas Instruments at Bangalore, "The focus on the Indian industry was always on services and this is changing now with about 100 companies or so doing chip design-related work including EDA design support, validation etc." He goes on to add, "Unlike in the services industry the level of involvement here is very high and it requires specialised skills and training."

The hopes pinned on the growth of this segment are best reflected in some corporate ventures that have been set up recently. For instance, Vinod Dham, better known as the father of Pentium for leading the team that delivered the Pentium, 486 and 386 microprocessor families at Intel, and Tushar Dave, former mergers and acquisitions manager at Broadcom, were reported two months back to be launching a venture capital fund called New Path Ventures to promote the Indian hardware design segment. As part of this, the fund is setting up a chip design company with Bangalore as its headquarters. Also, India's top software exporter Tata Consultancy Services (TCS) recently said that it would enter the chip design business. The company has said that it would be putting together a team of chip designers and is in talks with some US companies for design services.

Says Anant Singhal, India sales manager, Synposys (India) EDA Software Pvt Ltd, "Today the extent of integration happening on silicon is enormous. Full domain capabilities are being fabricated on a single silicon die (System-on-a-Chip; SoC). Each of these chips themselves is being considered as "product" by the nomenclature of the semiconductor industry itself. Going by this definition yes, product development is already happening in India with enhanced focus."

The bullishness is also reflected in the hiring patterns of global and local top-notch IT players. There has been a spate of talent hunts in India in the area of chip design and embedded chip design software by companies like Intel, Honeywell, Alliance Semiconductor, Infosys, Satyam Computer Services and Sasken. According to HR professionals, the market for embedded chip design and applications is growing fast and dotcoms and telecom equipment have now given way to chip design as the next growing market. Hence, the thrust on skills in the latter area.

What's more, global chip leaders like Intel and Texas Instruments- which was one of the first to set up base in India and which developed the TMS320C2700, code-named Ankoor- are pumping more money into their Indian development centres. According to a report published in October last year, Bangalore houses 47 of India's 60 chip design firms that are "doing cutting edge design work". This number, incidentally, has only been rising and includes some big names such as Motorola, IBM, Cisco, Lucent and Sun, among others, besides some Indian names such as Accel, C-DAC, Ittiam Systems, Wipro Infotech, Tata ELEXSI and Tejas Networks.

The spurt in focus on chip design and demand for chip related skills come in the wake of a global recovery in semiconductors. For example, stocks of US semiconductor companies like Applied Materials Inc have been going up post-profits. Also, according to a Gartner forecast quoted in a report, there will be a 3 per cent growth in global semiconductor revenue this year "after its worst fall ever in 2001." It adds that India's chip design industry is estimated to generate revenues of Rs 1,500 crore ($ 300 million), which though small by global standards, is still growing and is expected to account for a larger share of the global market in three-four years. According to a Monster India.com report, "The integrated circuit (chip) design industry is pegged to grow into a multi-million dollar industry in India, thanks to the US slowdown."

Besides the global boost in this segment, availability of talent is one main reason why IT majors in India are turning to this segment and why global majors are looking to India for skills in this area. Besides, it comes with a cost advantage for them. Indeed, with consumer electronics firms needing cost-effective chip designs, outsourcing chip design-related work from countries like India is expected to grow rapidly especially as embedded chips get incorporated into more and more devices. According to analysts, India has an advantage in terms of skill-sets in the area of software bundled with chips. And according to industry executives, the skills of the Indian chip design engineers are being recognised globally. Also, as their salaries are much lower than their US counterparts, it gives them a competitive advantage, they feel.

Having said that it would also be prudent perhaps to look at some challenges that the industry faces. According to some, to hail these developments in this segment as a sign of boost to product development in the country might be premature yet. Says Mr Anant, "The other (and probably more appropriate from the point of view of the general public) definition of a `product' can be an `end user product' like a consumer, computing, communication device or an industrial application product that needs to have ICs in it. By this definition, the focus on product development is still lacking." He also feels, "The local industry is largely design services. This business is kind of stagnant due to the downturn in the semiconductor industry. The local semiconductor consumption itself is on the lower side because of which design services clients are mostly overseas." But he does admit that "on the other hand, more design work has been moving to India and several large semiconductor vendors are growing their operations in India."

According to Mr Girish of Texas Instruments, "It's not feasible for many small Indian companies to make sustained investments for a long period of time, which is required for product development (including the area of chips design/manufacture). I don't think we can do that now. Also, to get into full-scale manufacturing, the government should also take some efforts. It has to take a decision to shift manufacturing units to smaller towns instead of concentrating on the metros."

According to Mr Anant, however, the challenges are on a different front. Says he, "Investments in chip design infrastructure are actually insignificant compared to those required to manufacture chips. The actual problem is that quality talent with the right skills is becoming scarce. The skills required are in vertical domains (DSP, telecom etc.) along with in-depth understanding of chip design challenges like designing for high speed, low power, small size, handling large complexities, accounting for deep sub-micron effects like signal integrity. This is assuming that these engineers come with basic microelectronics skills including an understanding of semiconductors and design basics like language-based design methodologies. Exposure to contemporary design tools is also important."

This may be in contrast to the upbeat views held by some others on the talent availability in India in these areas, but most do agree that the focus of education on EDA, VLSI design etc is inadequate, obviously for lack of enough funds. So the onus is on companies to train freshers in these areas while running the risk of losing them to competitors, as Mr Girish feels. But there are some reasons to cheer too. For example according to Mr Anant, in the past couple of years or so some institutions (other than a few who had them earlier too) have launched post-graduate programmes in microelectronics. He adds, "We are supporting several such programmes through donations of our tools so that graduating students have exposure to infrastructure that is used in real-world designs. One new trend is the cropping up of private VLSI training institutes too. To keep up with the need, more institutions may need to offer VLSI courses. Also, curriculums need to start exposing students to VLSI earlier than later."

Chip design also involves a fast changing technology and there is the need for constant upgradation. For example, 0.13 micron technology (which permits upto 10 million gates per chip) is the current norm for processors as against the earlier 0.18 micron technology, (2-5 million gates per chip). And while specialised chip designing tools compatible with 0.13 micron technology and developed by companies such as Cadence and Synopsys have made it easier and more and more Indian companies have come to the forefront in the area of support tools, designing in the dynamic ever-changing environment would still get more complex and call for considerably high levels of skill-sets. This might indeed be critical in determining India's position globally in the area of chip designing.

(N Jayalaksmi is a freelance writer, who writes for dailies like Times of India)

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