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Indian design activity on fast track, says iSuppli

Posted: 11 Nov 2005 ?? ?Print Version ?Bookmark and Share

Keywords:india? semiconductor? supply?

India's semiconductor design industry will nearly triple by 2010, as overseas and domestic suppliers rush to establish or expand their chip development efforts there, according to market research company iSuppli Corp.

iSuppli (El Segundo, Calif.) predicted that the semiconductor design industry in India would amount to $624 million in 2005. The company reckoned that the industry would be worth more than $1.7 billion in 2010.

The company predicts semiconductor design revenue in India will be $804 million, $1.00 billion, $1.22 billion, $1.42 billion in 2006, 2007, 2008 and 2009 respectively.

Texas Instruments Inc. was the first company to establish a captive design group in India, which it did in 1985. Since then the number of multinational and Indian chip design companies has increased to approximately 125, iSuppli said. In 2004, multinational companiessuch as TI, Intel, Cypress, Infineon and STMicroelectronicscomprised about 70 percent of the total semiconductor design activity in India, although Indian companies, such as MosChip and eInfochips Inc., are seeking to expand their design operations.

The key factors driving growth in the semiconductor design industry in India include rapidly-growing local markets, a strong education infrastructure, low-cost design talent, short product lead-times, reduced barriers to entry, rising government support and improved infrastructure, iSuppli said.

iSuppli said that for leading multinational companies, the aggregate cost savings from offshoring design activities to countries like India and China typically ranges from 25 percent to 50 percent, while the cost reduction due to lower employee salaries ranges from 80 percent to 90 percent.

However, the market research company said that the Indian design market faces challenges including a lack of trained designers and high labor mobility. Experienced professionals tend to move from one company to another, especially in hubs such as Bangalore, where more than 70 semiconductor design companies operate. This will cause salary levels to escalate relatively rapidly, iSuppli said.

- Peter Clarke

EE Times

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