The Rise of Kaynes Technology: Redefining India's Electronics and Semiconductor Arena
With significant growth in India’s electronics and semiconductor space, we at EE Herald strive to sift through mere news-worthy MoUs and future plans, instead focusing on providing solid news and analysis about substantial real happenings and expansions. A prime example is the 36-year-old Mysore-based Electronics System Design and Manufacturing (ESDM) company, Kaynes Technology, which is undergoing massive expansion in the electronics and semiconductor areas. Owned by Ramesh Kannan, Promoter & MD, and Savitha Ramesh, Promoter & Chairperson of the Board, Kaynes Technology exemplifies organic and authentic corporate growth in the ESDM sector post-liberalization, faced with intense global competition and other open-economy challenges.
I recently met with Raghu Panicker, CEO of Kaynes Semicon (a 100% subsidiary of Kaynes Technology), to learn more about the company's expansions.
Pic: Raghu Panicker
Here is the complete Q&A session I had with Raghu:
Q: Kaynes Technology's attempt at vertical integration in ESDM is bold. Can you elaborate on Kaynes’ expansion and priorities?
A: Kaynes Technology, a 36-year-old EMS company, started as a contract manufacturer and has evolved into an ODM. From PCB design and assembly, we now design and manufacture complete products for others. We have a comprehensive ecosystem for electronics manufacturing, including sheet metal, plastics, relays, and wire harnesses.
Our expansion in Mysore is significant, especially in Chamarajanagar, where we have acquired 17 acres of land. Here, we intend to install 8 lines, 3 of which are already operational, along with a clean-room facility. IT and telecom products will be produced in Chamarajanagar, along with our automotive line, including EV and larger form-factor products like EV charger hardware. We are also diversifying in Mysore by adding a bare board PCB line.
For OSAT, we are establishing an R&D line in Mysore for silicon photonics. With these expansions and diversifications in and around Mysore across EMS, ODM, and core research, we are further expanding in Hyderabad, Telangana, by establishing an OSAT plant with 13 OSAT lines, an ATE line, and a Reliability line.
Our expansions in Manesar, Delhi NCR for MES, and a new EMS production line in Pune for automotive, demonstrate our commitment to moving closer to our customers. With our corporate office in Mysore, we are expanding throughout India, with a significant focus on Mysore.
Q: Can you discuss your partnerships with global and local companies, organizations, and industry experts?
A: Kaynes Technology highly values partnerships. Our EMS growth, particularly in railway signaling systems, has been greatly aided by our partnership with Siemens. Our automotive growth is largely due to support from companies like Mahindra and Ola, particularly in the EV business.
During the Covid pandemic, we manufactured ventilator systems for India and now plan to produce MRI and ultrasound medical subsystems and components. Mysore, being a medical hub, is where we manufacture many imaging products, notably for Skanray.
In IT and Telecom, we have begun manufacturing high-end server hardware for the Indian market. Our OSAT partnerships include Globetronics, Malaysia, for process and manufacturing support; Mixx Tech, USA, for advanced packaging in Silicon Photonics; and UST for ATE expertise. Ponni Tech, Malaysia, will collaborate with us in OSAT delivery and implementation, and we have also partnered with Infinipack for package design.
Our Advisory Board for Kaynes Semicon includes industry veterans Raja Manickam, Sunny Malhotra, and Prof. Veeresh Deshpande from IIT Bombay.
Q: Could you share more about your R&D plans, budget, and allocated resources?
A: Our subsidiary, Kaynes Embedded Systems (Kemsys), comprises a 100-member team focusing on design and R&D. For our OSAT business at Kaynes Semicon, we are investing in R&D, particularly in Silicon Photonics, collaborating with various IITs and international universities like Arizona State University and Georgia Tech.
We are also working with ITI and diploma colleges to train operators and technicians, investing in their education to foster long-term commitment to the company.
Our R&D investment constitutes about 10% of our revenue, with a plan to increase it to 15%, aided by government support of 2% to 3%.
Q: What is your observation on the local talent availability for semiconductor manufacturing?
A: India has made significant strides in VLSI design engineering over the past 20 years. We foresee similar growth in semiconductor manufacturing talent. Training and bringing in experts from abroad is currently our best approach.
Q: Can EMS talent be utilized for OSAT?
A: Yes, but they require specific training and tuning for OSAT. They are already familiar with the processes and need to adhere to stringent quality standards.
Q: How has physical infrastructure evolved, and are there any remaining bottlenecks?
A: Infrastructure, including airports and roads, has greatly improved. For example, our Hyderabad plant is just 30 minutes from the international airport, providing a strategic advantage. Overall, there are no significant infrastructure issues currently.
Q: What about the availability of materials and manufacturing equipment?
A: Unfortunately, we have to import all equipment and most raw materials, which can be challenging. We are in talks to establish raw material manufacturing in India, but this will take time.
Q: How do you compete on cost with established players in OSAT?
A: Government subsidies and strategic location advantages play a crucial role. We are focused on delivering quality products with high efficiency to maintain a competitive edge.
Q: Lastly, what are your plans for environmentally sustainable manufacturing?
A: We are emphasizing green technology, such as solar power, in our manufacturing plants, including the upcoming Chamarajanagar plant. Our focus is on minimizing electricity usage and ensuring efficient water treatment.
Pic: Ramesh Kannan and Savitha Ramesh on the occasion of opening of Kaynes IPO on 12th Nov 2022.
Author: Srinivasa Reddy N