Demand for electronic goods is rising fast in India and driving up semiconductor consumption in the country. This is seen by industry observers as a positive trend that could set the stage for India to one day emerge as a major manufacturing center for integrated circuits, much as it has become a center for software development.
This hope was expressed in presentations at the India Semiconductor Association's annual Vision Summit held last month in Bangalore. The theme of the two-day event, organized by the ISA along with India's Department of Information Technology and UK Trade & Investment, was "Electronic Systems Innovation: India's opportunity to drive global markets."
The summit identified numerous market opportunities for development in the semiconductor industry in India, and while participants stressed the availability of skilled personnel to help move the market forward, they also addressed the various challenges facing manufacturers in the sector. These include how best to identify and raise the resources to lift the local industry up to the standards manufacturers enjoy in developed economies.
I believe that with the growing globalization of the high-tech product-development community in India, the nation will continue to provide a huge base for innovation and talent, adding to the international structure of the electronics community. The Indian semiconductor industry has grown into a prominent player in the past couple of decades and has been a vital contributor to the nation’s economic growth.
"The Indian semiconductor industry, following the global trend, is set for tremendous growth, with sales expected to hit $8 billion by the end of 2011," notes Frost & Sullivan in a research report.
Since India has the world's second largest population and increasing domestic demand for electronics equipment, the potential for higher semiconductor consumption and sales is huge. There are also vast, untapped opportunities for locally made products for the non-urban market, especially in verticals such as telecom and wireless applications.
The growth of the mobile handset, consumer electronics, and telecommunications markets, for instance, has boosted revenue in the electronics industry, and this will in turn create opportunities in the country for local semiconductor production.
Among the challenges local players can help resolve is the issue of inadequate power supply. India continues to face power shortages, and this has influenced customers who often prefer battery-powered, portable electronics devices. Since these are sophisticated devices, however, the power requirement is typically higher.
That's why the ISA Summit focused on power-related issues and how to meet this challenge. Semiconductor companies are trying to develop low-power chips, yielding longer battery life, and India can help in this area by offering local applications in the telecom, automotive, industrial electronics, and consumer electronics markets.
This year the India Semiconductor Association is planning to focus on microcontrollers that have power-saving features as part of its plan to create a niche market for manufacturers in the country.
there is no doubt in my mind that the potential for explosive Growth in India is HUGE;especially in Rural India where penetration of electronic Devices is still very,very limited.
But the big problem remains Infrastructure[The lack of it and obstacles to it].
It is very difficult to get land in India for large Infrastructure projects(because you have to go through so many different authorities and layers and layers of bueracracy).
Mfbertozzi, advertisement is also one of the key factors for investment and business. But again advertisement for investment and products are different. India had done a bit of advertisement for IT/BPO sector and successful because infrastructure is not a big constrain for IT, the only requirement is seamless Internet connectivity and talent. More over initial Investment is also less.
But for semiconductor industry the entire scenario is different. Infra structure is a big constrain, apart from that availability of raw materials including electrical and electronics components, semiconductor ICs and other components, power, internal market etc are very much required. Since this sector requires huge investments, without creating the facility, there is no pint in advertisement. So the basic is creating environment and facilities, then advertisement about the merits of doing business. Then only it would be successful.
Toms, as posted a few weeks ago, I agree with your interesting editorial and also with posts below. In particular they allow me to provide a new starting point. While production quality is good, I was thinking other countries are approaching the market, pay more attention to investments in marketing and advertising. Are you think indian manufactures have the possibility to improve also in that segment or is not necessary for playing a key role?
t.alex, you are right. Even though Indian semiconductor industries are lagging in fab sector, country has a large number of OEM and ODM companies. They are normally backing up with a well connected supply chain, by local and global players. Recently Lattice semiconductor and Strontium expands their operation in India. As of now, almost all OEM and ODM companies are depending on such channels for their requirements. Hope the scenario may change within 4-7 years.
Toms, I have seen India having lots ODM and OEM. Definitely having a local supply of semiconductor is of great advantage for the production process. Currently they need to go through local distributors to get the components.
Kunmi, yes the best is yet to come. Since India have 1.21 billion population, it is estimated that India can consume 24.2 billion $ to 36.3 billion $ worth of semiconductors. To reduce the manufacturing cost and also to reap local advantage, companies are buying much of the electronic devices/ semiconductor components from local market, which resulted in increase of semiconductor sales in India.
The basic requirement for any manufacturing and design industry for succeeding are leading edge technological capabilities and availability of local market. Presently India has both these two factors. The most essential factor for manufacturing is the availability of raw materials i.e. components which includes hundreds of varieties of electrical and electronics components along with semiconductor ICs and other precision components. There is only a thin skeleton of such suppliers in India. This need to be strengthened by helping struggling passive and discrete-semi electronic component manufacturers with technology-support in making the latest components but at competitive prices.
It is very possible for India to share a role in Semiconductor production. The Indian government may step into it but the critical challenges of power failure, and other economic challenges may impact stability and continuity of such a business idea. The Question that may even arise is the degree of demand for the Semiconductor products within the immediate environment. I believe the best is yet to come!
SME_Business_services, According to the latest survey the Indian semiconductor market revenue becomes $8.04 billion in 2011 from the existing $6.14 billion, with a Compound Annual Growth Rate of (CAGR) 22.1 %. During the same period Total Semiconductor Available Market (TAM) is forecasted to grow at CAGR of 34.8 percent, which is far higher than total market and with TAM revenue of $4.84 billion in 2011. This is due to the penetration of mobile phones, personal and home electronic appliances into rural India and the masses.
It is assumed that 1.21 billion population can be roughly assessed $20 to $30 worth of per capita semiconductor consumption, resulting into India consuming 24.2 billion $ to 36.3 billion $ worth of semiconductors. To reduce the manufacturing cost and also to reap local advantage, companies like Nokia had set up manufacturing plant in Chennai. Nokia's buys much of the electronic devices/ semiconductor components from local market, which resulted in increase of semiconductor sales in India
Ashish, you are absolutely right, I had pointed out the minimal. If we are analyzing the bottle necks, we can find ‘n’ number of factors, including your points. Indian market cannot beat Chinese products, because of the cheaper price and quality. If we are talking in terms of business, the basic reason is India’s low per capital income. If per capita income is more, then the purchasing power increases and hence most of the people would prefer quality products. As a county, India cannot ban importing from China or any other countries due to different treaties existing between these countries.
Alternately some of the possible ways are educating the peoples against Chinese products (less effect), equip (like china) with low cost gadgets by government subsidiaries. Since India have 121 crore population, mass production can also lower the cost factor and the best way is making the same product with different quality and price, by targeting different economic levels of peoples
Semiconductor consumption in India is still too small (per In - Stat only about 1 percent of the world production) to tempt established Semiconductor houses to part with their proprietary technologies, and is expected to remain so for the next 3 to 4 years even if it grows at a CAGR of 30 percent. Current semiconductor usage in India is some $1.5 billion per year – distributed over a wide variety of applications (analog power devices, amplifiers, ICs, digital logic, processors, memory etc) that require a range of incompatible Fab technologies (CMOS, BiCMOS etc). From a strictly business standpoint no single state of the art Fab (95 nm, 300 mm, min. 300 k wafers per yr) can be operated economically atvthese levels.
Thanks,
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Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
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