Global trends like social media, mobile connectivity, cloud computing, and big data continue to drive rapid development of new electronic technologies, products, and markets. The convergence of these trends into the “Internet of Things” is rapidly transforming society, and we are seeing the impact in a number of industries, from automotive to home security to medical. All of this provides tremendous opportunities for electronics systems design and manufacturing companies around the world.
Analysts forecast that the Internet of Things will include 50 billion connected devices by 2020, and that those devices will create and analyse 50 zettabytes, or 50 trillion gigabytes, of data. This combination of devices and data is predicted to create a $4 trillion global market by 2020, with $400 billion of that in India. For those of us in the industry, these are very exciting trends because they will create lots of demand for advanced semiconductor devices and also for the design tools used to create those devices and systems.
In more than two decades of personal experience as a venture capitalist in Asia, I have seen big changes in the semiconductor industry. In relatively short order, the industry has grown from isolated test and assembly operations to a complete ecosystem, capable of producing complex chips with the most advanced manufacturing technologies. Partly as a result of that success, Asia’s position in the value chain has changed. Instead of producing parts mainly for external markets like Europe and America, local companies can now also design products for local needs because local markets represent profitable opportunities.
An important consequence of this surge in local demand is that it spurs the startup ecosystem and mindset. According to the BBC World Service Poll, India—along with Canada, the US, and Australia—is one of the most favourable destinations to incubate new ventures. Companies like Ineda Systems, Ittiam, MindTree, Saankhya Labs, Sankalp Semiconductor, and Signalchip are examples of the startup state of mind in India.
Looking forward, I see great opportunities and strengths in the electronics industry in India. Strong universities are producing many well-trained engineers and scientists who are driving innovation and technical development. The business culture in India clearly encourages new businesses, and the country’s culture of working hard through tough challenges and adapting to changing market opportunities is a huge asset. Government policy has recognised the opportunities in semiconductors and supports them with investments, procurements, and market access. And private venture companies are also making investments in the local electronics industry. The combination of these factors makes India a very promising area for technology development.
The National Policy on Electronics (NPE) that the Government of India unveiled last year promises to be huge game changer that can catapult the Indian electronics system design and manufacturing (ESDM) ecosystem into the global arena.
India has been very strong so far on the design front and now the government, along with the support of private entities, is looking to expand the focus. In keeping with the objectives laid out in the NPE, the Indian government recently announced their approval for the setting up of two semiconductor fabs in the country, one proposed for Greater Noida and the other for Prantij. Once established, these new fabs will help stimulate the flow of capital as well as technology into the country, creating new opportunities for electronics innovation.
Both the proposals focus on 90nm, 65nm and 45nm geometries in the initial phase, and that’s a great entry point into the fab business as the initial and ongoing investments are not prohibitively high, as they are for advanced node fabs. More importantly, specialty fabs focus on specific areas of analogue, mixed signal, MEMS, high voltage, and power management. These areas of semiconductor development are forecasted for fast growth in the next decade, thanks to technology trends like the Internet of Things, mobile connectivity, and wearable devices.
My advice for electronics companies in India is to focus on innovation and take product risks, but make sure your direction is on track by achieving early design wins with real customers. And from a deeply practical standpoint, keep tight discipline on capital efficiency. Invest prudently in your core differentiation and collaborate with the ecosystem for a complete solution. Part of what enables a startup to succeed is an ecosystem of trusted partners. No company succeeds alone in today’s competitive market, but together we can achieve success.
(The writer is President & CEO of Cadence)
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