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Russia tech growth hinges on government push

Posted: 01 Dec 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Russia? semiconductor? market? IC? DTV?

Russia ranks near the bottom of the ladder among participants in the world's electronics and semiconductor markets, but the country has the technical resources to forge a formidable industry presence. Whether it can do so rests with the government's willingness to define high tech as a national interest.

That's the consensus of industry watchers such as Jack Barbanel, executive managing director of Moscow-based Strategic Investment Group. "In my 15 years of observations since the collapse of the USSR and my involvement in defense convergence projects, I find that one crucial problem persists" in Russia, Barbanel said at the October Semi Expo/CIS2006 conference in Moscow. "Despite the government's active role in support of both domestic and foreign investments in high technology, the concept of separate defense and commercial sectors is foreign from a financial-model point of view."

Russia continues to import most of its high-tech requirements, Barbanel said, and VC and entrepreneurial skills need to be cultivated if the country is to nurture a high-tech business culture. But Barbanel and others see signs that Russia is moving in the right direction.

"They are starting to develop high-tech economic zones, using the successful ones in Israel and Singapore as a guide," said Barbanel. "What they need is to adopt an accelerator model that merges Western venture capital and Russian brainpower."

Barbanel said it is misleading to classify Russia as an "emerging market" in the same vein as China, India or Brazil. "I would classify it as on the road to a 'restructured market' because it has all been here all alongthe talent, resources and growth areas. They don't have to start from scratch. They led in many tech areas" under the Soviets.

For example, Russia has long been a leader in aviation and space technologies, Barbanel noted. "Now they want to become the low-cost leader in those fields, and microelectronics would enable that."

Photovoltaics was a focus under the Soviets, but took a hit when government funding ceased 15 years ago. Today, Russia provides photovoltaic devices for both domestic and foreign markets but accounts for "a very, very small portion of the global market," said Art Tolokonnikov, sales and development director at the Podolsky Chemical/Metallurgical Plant in Moscow.

Tolokonnikov nevertheless said he sees growth opportunities for Russia in photovoltaics, predicting that solar-energy development "by all industrial countries" could yield "cumulative CO2 emission savings of 2.2 billion tons by 2025."

Growth areas
Other potential growth areas for the Russian Federation range from manufacture of low-cost DTVs to local assembly of vehicles for foreign-based automakers. With the car becoming a "computer on four wheels," Barbanel said, domestic electronics capability is "but a step away from being implemented in car assembly plants all over Russia."

"The immediate opportunities for Russian-based electronics are in meeting the interest and demand of its some 250 million inhabitants," said Jean-Marc Chaumont, director of emerging markets in Russia and Eastern Europe for STMicroelectronics (ST).

"It's in ST's interest to be in Russia, and we are working with chipmaker Mikron on smart cards and automotive developments," said Chaumont. Both ST and Infineon Technologies have active development and limited co-fabrication operations in the Zelenograd region near Moscow, where Russia's largest semiconductor companies, Mikron and Angstrem, are in full-volume production of devices on 180nm processes.

Andrei Vasiliev, general director of Pulsar, which in 1953 became the first company to establish a semiconductor fab in the Soviet Union, said he would entertain any suggested modernization strategies for power electronics plants. "We are producing L-band microwave transistors for communications applications, and the demand for our parts is consistently increasing," Vasiliev said.

Design rules
U.S.-based EDA giants Synopsys Inc., Cadence Design Systems Inc. and Mentor Graphics Corp. are working to educate a coming generation of designers in Russia. Rich Goldman, recently appointed CEO of Synopsys Armenia, said the company has acquired two R&D centers, in St. Petersburg and Moscow. "We are also setting up a new computer lab and education program at MIET (Moscow Institute of Electronic Technology)," said Goldman.

Mentor Graphics also has a working relationship with MIET. Mentor provides EDA software to the institute for educational purposes in return for access to the talent pool of MIET graduates.

Cadence, for its part, has been in Russia for 10 years and "has 140 MIET graduates from a three-year program working for us now in Moscow," said Anatoly Ivanov, lead support engineer for the company's system business services operation in Moscow.

In establishing its program in Russia, Synopsys can leverage its experience in Armenia. But Goldman said he doesn't expect this experience to be duplicated in Russia, because Armenia's "underlying infrastructure and keen interest in working with outsiders are just not here." For example, he said, Armenian expatriates working in the States constitute a successful lobbying force for encouraging development back home.

Russian officials are pragmatic about such assessments. "In Russia we have great ideas, but few that can be productized under the current environment," acknowledged Michael Perevozov, head of investment analysis and prognosis for the Federal Agency for Special Economic Zones Management. To encourage the commercialization of ideas, the government has established an investment fund for the Russian Federation that features "a novel distinction for us," said Perevozov: a provision that allows unused funds from one fiscal year's budget to be rolled over to the next. The program, valued at about $6.2 billion for fiscal 2007, allocates funds for concrete projects that result in real products, Perevozov said.

Some Russian executives expressed reservations about the program. "We had similar promises in the past, and those fizzled," said Mikron CTO Nikolai Shelepin. "We have to depend on ourselves for creating opportunities for both domestic and foreign investments in our high-tech capabilities."

Both Mikron and Angstrem have found Russian oligarchs' investments in their organizations useful, but lacking clear direction for technology development. "It's a purely financial deal for them," said Angstrem director general Anatoly Sukhoparov.

Sukhoparov said that Angstrem has engaged with Western companies on 20 180nm designs and two at the 130nm node, adding that other companies in the United States, Europe and Asia are evaluating the company's fab operations now.

- Nicolas Mokhoff
EE Times

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