INDIA Penn vFINAL DR 18/6/08 11:34 Page 11
Semiconductor India
Semiconductor India
The next 20 years – Hope vs. Reality
The long term plan of the Indian Government and semiconductor
industry is clear and there will be high technology manufacturing in
the country. In developing the idea from scratch the region has the
luxury of learning from other regions as they develop. Malcolm Penn,
CEO of international analyst company Future Horizons takes a look at
the key factors that are likely to lead to success.
When looking at the semiconductor Figure 1
industry dynamics and ecosystem, one of The niches that
the key industry enigmas is its constant combine to
change and stability. Whilst a first sight this make up what
might appear contradictory, in practice it is known as the
underpins the industry’s very being. semiconductor
Understanding, and exploiting, this apparent industry
contradiction is what leads to real long term
industry wealth creation, for companies,
investors and governments.
Back To (Chip) Basics
Consider therefore some of the chip
fundamentals and their impact on the
industry. A proper understanding here is a Semiconductors are a cost, not value, driven commercial risks across a balanced
prerequisite for success. There is no such industry; there are no high value, high portfolio and increases the imperative for a
thing as a ‘semiconductor market’as it is volume market niches. Companies must firm to be the number one player in their
generally described by the media. It is not learn to compete in the market. The chosen specialisation.
homogeneous, but a combination of 30 alternative is a very slow death by
significant US$1-5 billion segment niches, strangulation. Companies need to pick their Timescales
Figure 1, three of which (PCs, Mobile and corner and fight furiously for domination; These are an enigma. On the one hand
Automotive) are much bigger, plus a co-operating where it makes sense and Moore’s law drives an unrelenting pace of
hotchpotch of obsolescent miscellany. Each competing where it does not. ‘Make lunch technological change, with a new
of these segments is independent of each or be lunch’ remains as true today as it technology node introduced like clockwork
other, with different market heartbeats and always has done but remember only the every two years. On the other hand, it takes
industry characteristics. Some segments are paranoid stand any chance of survival. at least three years for new IC designs to
in their early phase of development whilst No single company is active in all sectors or reach mass production and two years to
others are in decline, and everything in products, indeed the trend towards build and install new plant capacity. For a
between. Some thus have high double digit specialisation and ‘core competencies’ is new design concept, the wait is even longer,
growth rates and others are low single digit, accelerating, not diminishing. This reduces typically five to seven years, from concept
some even negative. the ability to spread the market and to market acceptance.
Summer 2008 | www.semiconductor-india.com 11
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