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Chipping In

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DQI Bureau
New Update

It promises to be the next chapter in the unfolding saga of India's global

ascendance. The beginnings are already there and if India can capitalize on the

opportunity, then chip designing will see the same run of success that has

marked the Indian software sector.

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Traditionally a domain of big-players in semiconductors production, the chip

design industry changed permanently with the appearance of the "fabless"

model. The model marking the separation of the capital-intensive fabrication

phase from the people-intensive design phase came into existence with ASIC

companies like LSI Logic, NEC, Toshiba and IBM offering physical design and

manufacturing services, and the creation of stand-alone foundries by Taiwanese

semiconductor companies. Suddenly the doors opened for a number of small

companies, which had the talent but not the required capital, and also for

countries like India to get into chip design.

The "fabless" trend continues to be on the ascendent as "fabless"

companies aggressively pursue growth-targeting new segments, subsegments and

niches with their chips. In 2002, fabless production accounted for $16-17 bn, or

11% of the semiconductor industry's estimated $160 bn in output. The US

Fabless Semiconductor Association predicts that the market shares of fables

companies will jump from just over 10% today to 50% by 2010. A promising

opportunity for the design services companies and "design starts".

Emerging Frontiers



The global market for semiconductors is expected to reach over $200 bn by

the end of the year, the Gartner Group predicts a compound annual growth rate of

10.6% between the years 2003 and 2008.

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India's Position

Chip design industry in India is still at a nascent stage at an estimated 



$200 mn
 

While Indian players have a presence in all segments of the design part of

the value chain, a majority of them fall in the low-risk, low-investment

outsourced design services segment.

A significant opportunity waits India with the emergence of Silicon

Intellectual Property (SIP) or "Chipless" firms. The potential for SIP

arises from an increasing demand for closing the design gap, which refers to the

gap between the potential available for design and the actual capacity available

for design. Advances in semiconductor technology have made it possible to pack

an increasing number of transistors on a single IC. However, as designer

productivity has not increased at the same pace, newer ICs take a larger amount

of design effort, increasing both design timelines and design costs. The only

viable solution is to reuse design with SIP reusable blocks. This helps in

ramping up a project in quick time.

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As design complexity grows, so will the need for reusable designs, and Indian

firms with the required expertise can make a mark in this space and also command

better margins. Development of IP is not a well-accepted business model for

information technology companies in the United States as it is not scalable to

the volumes needed for business there, but it may well prove to be good business

for Indian firms.

Some pioneering Indian design service companies have spotted the potential in

this field and have started offering IP components along with their other

services and products. Take for instance verification services. One of the main

challenges for chip design companies is to not only develop new designs but also

validate them. Since validation efforts are almost three times the design

effort, much time is lost in bringing the product to market. Verification

components can considerably reduce the time-to-market.

Semiconductors

Global Market*



$200 bn


Annual Growth** 


(Year 2003-08)


10.6%


*End of the year


**Gartner Group prediction




 

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The growing consumer electronics market and the presence of all the elements

of chip design ecosystem can support the movement of Indian chip design services

companies up the value chain in the future.

Currently, all the product definition for a chip is done outside India by

chip companies in consultation with their customers. But the presence of

necessary chip design infrastructure coupled with the large size of the consumer

electronics market may eventually lead to the domestic OEMs working with local

design firms. The trend of outsourcing the entire chip development process is

gaining widespread acceptance among chip companies. Physical design and

verification are easily outsourceable parts of the process, but now, an

increasing number of customers are farming out the design piece as well.

In order to tap into this "spec-to-silicon" services market, Indian

companies must cultivate the following competencies: "whole product"

mindset, tight relationships with foundries and testing and packaging houses,

and mixed-signal (analog and digital logic on same chip) expertise. In addition

to these competencies, Indian chip services companies must partner with EDA tool

vendors to come up with an innovative pricing model that will give them access

to expensive design tools to serve their mutual customers.

"Opportunity is missed by most because it is dressed in overalls and

looks like work" are the famous words of Thomas Alva Edison. We are at the

doorstep of an exciting new era. We must step forward and grasp it with both our

hands.

Tapan Joshi is vice president, marketing, eInfochips

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