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Date: 23-02-10

SWOT analysis of India's electronics and semiconductor industry

India has enough resources, capabilities and opportunities to thrive and lead in electronics and semiconductor industry, which include design, manufacturing and services(doing everything in electronics but not owning the end-product). With some delighting expectations for Indian electronics and semiconductor industry from the yet-to-be announced Union budget 2010-2011, here we provide some of our brief observation/study.

Globally, India has achieved number one status in some sectors of engineering services. Thanks to Wipro, TCS, Mindtree, Aricent and lot of such electronics design service focused companies. Their achievement is highly laudable considering youngness of our electronics industry. The real credit goes to hardworking and talented engineers. This status needs to be maintained while getting into manufacturing and design. India should also be thankful to big daddies of global electronics industry for outsourcing their design work to Indian companies.

We failed miserably in manufacturing and core design (except few PSUs). Some of the PSUs like BEL and ECIL have survived due to their technological capabilities as well as protection from the Governament. C-DoT was marvelous (nothing wrong in giving full marks to Sam Pitroda and X-PM Rajiv Gandhi) in the beginning but later the reason for its failures is clearly the big problem of Indian telecom industry. If somebody say we can't make telecom equipments, then have a look at Tejas Networks; grown by 70% recently.

The basic requirement to succeed in manufacturing and design is to have leading edge technological capabilities and the other equally important factor is availability of local market. Presently India has both. Now, India's own design and manufacturing will surely happen with the support of government.

The most essential factor for manufacturing is the availability of materials i.e. components which includes hundreds of varieties of electrical and electronics components along with semiconductor ICs and other precision components. There is only a thin skeleton of such suppliers in India. This need to be strengthened by helping struggling passive and discrete-semi electronic component manufacturers with technology-support in making the latest components but at competitive prices. It is more easy to say this than really achieving due to the stiff competition from China and Taiwan. The CDIL is a lone discrete semiconductor vendor surviving in the global market with its base in India. Government and industry bodies have to identify such companies and provide incentives.
Industry can also look at China and Taiwan as alternate supplier for some of the components. Smart companies in India are already doing this. This alternative strategy is also OK.

The 2nd important factor is the speed of physical goods movements, so that supplier can deliver the product in-time faster exactly to the place customer wants. The sea ports, quick custom clearance, reliable road and reliable transportation matters here. We are improving here but at slow pace.

Finally the power, water, land required for industry; frequent power outages, shortage of water supply, bad roads will never allow Indian electronics industry to scale up to compete with the leading regions. Most of these above are somewhat known facts.

The real threat comes from lack of fundamental research:
Why not Indian premier engineering institute can't think out of the box technology solutions? Why should we follow the nano meter race? Why can't our research institutes develop devices, which work totally different from Silicon MOSFETs? Why not a different material? Why not light source more efficient than high brightness white LED?Why not a solar energy converter far more efficient than present thin film solar cells?

Why not we make our own semiconductor manufacturing equipment? Why we should always follow the tail of what researchers at US and Europe does? We should get rid off this herd like follow up on the technologies developed in the west.
Indian labs should develop disruptive technologies with economical and business strategy. Few such examples include Intel-Microsoft partnered PCs and the software, Wireless telecom developed by European companies. India's Simputer failed due to bad strategy.

On the academic front, Engineers who can't design and make a physical product are not worth of their marks they scored in theory subjects, even if they have scored 80%.

When we look at the market opportunity, if we can imagine, it's huge. India needs lots of electronics from ECG machines to solar power systems to mobile phones. Electronics is now staple, no more a luxury. A white LED lamp lantern can be cheaper and efficient than oil-lit-lamps. A phone is essential even to a low income earning person. An electronic id card is must for every citizen. India's electronics market is expected to cross $125 billion by 2014 from the present market of $45 billion and India's semiconductor market is also expected to grow nearly the same way. The India Semiconductor Association report states total revenues of the Indian semiconductor market is expected to reach $7.59 billion in 2010.

National electronic mission now need to be taken up in the same spirit of how the green revolution was taken few decades back, but green revolution output has to be maintained. Infact, electronics technologies need to be blended with Agriculture/farming technologies to produce healthier food grains at less cost.

We need our own microprocessor and many such smart electronic devices and technologies, at least one advanced semiconductor fab is required. India semiconductor industry as whole can be a fab-lite( infact very light) but never the fab-les, that's very risky.

Electronics mission should treat IPs and patents as our nation's another gold reserve. We should fill this faster. Awareness drive and incentives from Government is essential.

Finally most important is timing. 2010 to 2020 is the right decade to etch India in Silicon.

Below is th more related news on India's semiconductor industry

India semiconductor revenue to cross $8 billion due to localization of manufacturing

NXP Semiconductor's Neeraj hints on India's electronics industry opportunities

TI; a company with advantage to serve the Indian semiconductor market

De Core to soon produce white LEDs from its opto-semiconductor fab at Noida

Best consultants related to India's electronics and semiconductor industry

India Semiconductor Association suggests extending India semiconductor policy to 2015

Karnataka semiconductor policy recognizes 3 idiots

India will emerge into leading position in semiconductor market

Semiconductor-manufacturing investment flow of 23 billion USD into India

Indian Engineers severely lack exposure to semiconductor manufacturing

India; the blooming garden for semiconductor industry

SPEL; India's only semiconductor assembly and test services company grows by 14%

Wipro ranked as number-one semiconductor global R&D service provider

India badly needs a semiconductor fab

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