For semiconductor design companies in India, it’s time to ditch traditional product development practices, kill the sharp divide between hardware and software—and deliver a timely, agile and application-ready mix of the two. Semiconductor companies are working on application-ready platforms to survive in the fiercely competitive market. As silicon chips get more complex, the way forward for semiconductor players is to step up and provide building blocks for system companies to effectively use the complex chips. It’s all about enabling different applications and providing the hooks to the larger developer community to build apps on them.
A classic example is an automotive platform that will enable applications in infotainment, driver information, driver assistance and in-vehicle networking space. They will allow for video/graphics displays, image processing and recognition, networking and connectivity. A recent India Semiconductor Association—Frost and Sullivan report estimates that the total market revenues generated in the Indian semiconductor market were $5.39 billion and is expected to reach $8.04 billion in 2011. Segments such as consumer, computing and communications will drive the growth of the industry.
As semiconductor major Xilinx puts it: There are two key drivers for the electronics industry in the decade—the insatiable bandwidth demand led by the exponential and accelerated adoption of portable devices in India. Traditional semiconductor business models are proving to be unsustainable under the current market and economic realities governing the industry now.
The proliferation of mobile devices and services along with the technological advances in delivery of broadcast capabilities has driven the demand for network bandwidth through the roof. Data traffic in recent years have grown so fast, in fact, that analysts are struggling to clearly quantify what will be required to meet the insatiable demand.
“Communication original equipment manufacturers (OEM) continue to seek ways to reduce their R&D spend, minimise the risk and get to market faster with new products that will help them to charge ahead of the competition and innovations in semiconductor technology. Design will play a key role in helping meet the demands of the 21st century,” says Neeraj Varma, country manager—sales, India and Australia/New Zealand, Xilinx.
Earlier, semiconductor companies designed the hardware following which the engineers appended the software and sent to the market. This approach is not optimised to tap into all the capabilities of the silicon at the system level. The scenario has completely reversed now. Increasingly, end consumers are demanding for certain and specific functionalities. System companies are turning to semiconductor manufacturers for the hardware and software platform that will enable them to differentiate the products and solutions in the market from the competition, Varma explains.
Jaswinder Ahuja, corporate vice-president and managing director, Cadence Design Systems (India) says that due to recession, semiconductor companies became cautious and to save costs, the focus shifted to tapping the core strengths and existing product lines. “The main trend we foresee is the disruptive approach to supply application-ready platforms with hardware and software for a given application such as mobile computing. The repercussions of this paradigm change have already affected the electronic design automation (EDA) industry, and will continue to do so in 2011. “Traditionally the EDA industry has only addressed silicon, assuming that chips will be designed first and that software and applications will be appended later. However, now the product designs will be driven by a top-down view of the end applications and the design process must enable that approach,” he says.
This approach will continue to drive the trend of increased use of either purchasing or reusing IP (intellectual property) in system-on-chip (SoC) design. Significant problems like the design complexity, cost of silicon and time to market are challenging the semiconductor providers and directly affect their profitability.
As per the ISA report, telecommunications infrastructure development-related domestic semiconductor consumption in India is expected to grow by a massive 132.5% from 2009 to 2011. The increase in the demand for 3G consumer technology has resulted in an accelerated growth of the industry. In the coming two years, the growth is expected to be fueled by the increased consumption of electronic gadgets like wireless handsets, gaming devices, 3G networks, WiMax, netbooks, set-top-boxes and smart cards.
Neeraj Paliwal, who holds holds dual role at NXP; country manager—NXP India and Design Services Global Manager—Corporate R&D, says that as applications for semiconductors have become diverse, the industry is moving from being largely technology-focused to becoming more customer and application-focused. “The trend is now moving towards ‘society-focused’ solutions that will benefit not one section of consumers, but the community as a whole. Increased government spending in India on technology and infrastructure will also boost this trend,’’ he adds.
Meanwhile, the domestic semiconductor industry is seeking tax exemption and R&D grants to encourage the fabless semiconductor companies for next 10 years. Poornima Shenoy, president, India Semiconductor Association, feels that in order to encourage domestic electronics manufacturing and product development, it is proposed that the concessional rate of excise duty at 4% be applicable on all electronic products. As the domestic electronics manufacturing, having a large future potential, is yet to pick up, extension of this incentive by the government will help in giving a big push to this sector. It is proposed that this concession be extended for a period of 5 years.
Besides, a seed fund will help to encourage entrepreneurs in the fabless semiconductor space. The semiconductor association has also suggested extension of fiscal benefits under the software technology scheme (STP) till the year 2015 as it is slated to expire on March 31, 2011. The withdrawal of the benefits under the STP scheme would make the Indian semiconductor industry less competitive in comparison with the semiconductor industry in other countries and create a negative perception of our country as an investment destination.