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Date: 01-07-14

VLSI/semiconductor IP companies in India lack escape velocity

India is a fertile ground for VLSI semiconductor start-up companies. Since from the time of economic liberalisation, quite a good number of successful VLSI design companies have born. Most of them are into services. There are few semiconductor IP product sellers too. Though they are making profit, none has reached into the range of 600+ Crore Rupees (US$ 100 million) revenue. When they are at the threshold of entering into big league of suppliers, they get acquired by multinational companies. Cosmic Circuits is one good example of silicon IP vendor finally acquired by Cadence Design Systems, a US based EDA software vendor which is now ranking up in IP domain by inorganic growth.

It is not that founders of such companies wish to sell off their business, it is the difficulty of a VLSI product entrepreneur to scale further with increasingly high competition from global players. They find selling off the business is better option than pushing into the next layer. Now we got to wait and see India's leading silicon IP vendor Ittiam Systems launch off successfully into big league. Both the founders of Cosmic (Ganapathy Subramaniam) and Ittiam (Srini Rajam) held Managing Director Position in Texas Instruments India before they ventured into IP biz.

Indians VLSI design companies either product or services are extremely dependent on offshore business otherwise from the multinational chipmakers. There is hardly any domestic silicon IP market by Indian based chipmakers because there's no Indian chipmakers. Well that is a situation until now. Things are going to change with the availability of local semiconductor fabrication plants in India.

The product ideas will take better shape When all the elements required for the product to become real are available domestically. The three important things; local market, local VLSI design talent, and local India semiconductor fab can churn out extremely creative semiconductor ICs and also electronic products for the Indian market.

Finally the seriousness and the speed at which all the important stakeholders work to achieve India semiconductor design and manufacturing eco matters a lot.

The support from France based ST Microelectronics and Israel based TowerJazz in building local semiconductor fabs gives increased level of confidence for having India's local made electronics hardware.

One thing is clear, there's going to be interesting moments for Indian VLSI and semiconductor industry in the coming years.

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