The volcano has already erupted with the breakdown of US economy sounding the alarm bells for India Inc to look for alternatives. Undoubtedly, the present scenario has a definite impact on the Indian IT industry as well owing to the over dependency on mostly US markets. It reflects the dire need realized by the Indian IT industry to shift their dependency from US to UK and several other parts of Europe, especially the scattered areas of Western Europe and scandavinian countries. The process has been on place over the considerable period of time. During this on-going process, the Indian IT majors sensing the need of an hour have been recording a good amount of growth in these non-US markets.

On the semi-conductor front as well, India has come up in a good shape over a decade long span with the presence of global semiconductor majors in India. Most of these players have tasted the Indian soil with their Research and Development (R&D) set-ups.

In 2008, India has been forecasted to cover up $ 4.4 billion out of global revenue of $310 billion which accounts to 1.4% of total global revenues. The year 2009 has been forecasted to go further up to 1.6 % covering $5.5 billion out of total global revenues of $338.6 billion.
 
Steering the wheel towards Indo-UK possible partnerships, efforts are being put on to rope in more and more foreign semiconductor players to invest in India with the incentives like high availability of talent pool and cost effective factors.

ISA-UKTI-SIN Semiconclave 2008

The Indian Semiconductor Association (ISA) is putting up its efforts promoting India to the global semiconductor companies, exploring a scope for Indo-UK collaboration in the semiconductor driven industry and exposing India as an investment destination by playing the trump cards of cost-effectiveness and talent pool as a composite package.

The UK Trade and Investment (UKTI) and UK Science and Innovation Networks (SIN) are also apprehensive about exploring fruitful partnerships to mushroom the semiconductor driven collaboration with India.

The recently held ISA-UKTI-SIN conclave on semiconductor driven industry witnessed some fruitful discussions among the different industry constituencies and a UK delegation. The conclave “The Road to Business and Research Collaboration between India and UK” focused on trends in the semiconductor business in the fields of research and entrepreneurship in UK and India. The discussion panel consisted of representatives from companies and academicians of premier UK and Indian universities and institutes involved in the semiconductor fields.

In a round table discussion, Prof Shrupad Karmalkar (IIT Madras), Prof Dhrubes Biswas (IIT Kharagpur) and Prof Rudra Pratap (IISC Bangalore) have presented their views from Indian perspective.

The Academia Delegation consisted of Prof Michael Kraft (School of Electronics and Computer Science, University of Southampton), Anthony J. Walton  (Scottish Microelectronics Centre -School of Engineering and Electronics ,University of Edinburgh) and Prof Maria Merlyne De Souza (Chair in Microelectronics, University of Sheffield).

Apart from them, companies like E-Novations, BizEsp Limited and picoChip were part of the delegation.

According to ISA-feedback study 2008, there are scopes of collaboration between Indian and UK universities as well as between the companies representing both the countries.

Academia
Indian universities are equipped with faster prototyping and accessibility to quality talent and on the other hand, UK universities have better accessibility to advanced tools and facilities for research and specialised labs.

The collaboration may thrive in few areas like Very-large-scale integration (VLSI) design, Electronic design automation (EDA), Fundamental Research, Application Research, Talent Pool, Infrastructure and Embedded Systems.

A professor of IIT Madras pointed out the need of knowledge transfer through university exchange programmes and funding by industry and government where the UK based specialised labs can be used to augment the research activities.

Reaching out to that, Prof. Anthony J. Walton from Scottish Microelectronics Centre, University of Edinburgh welcoming such initiatives said UK universities can provide the facilities but the “funding is necessary.”

Prof Rudra Pratap of IISC Bangalore, made an interesting point saying that “Indian Academia withdraws from companies as companies make money and money is a sin for them”

Companies
India is no more considered only as a cost-effective destination but its talent is also recognizable globally. The Indian representatives emphasized the same point in the round table conference.

The collaboration between the Indian and the UK companies can pave the way for both in terms of larger benefits.

Indian players can be benefited with scope to work on advanced tools and application specific research whereas UK companies can overcome the challenges like talent crunch, high cost of manpower and larger number of design (fabless) companies.

India may prove as an ultimate product destination with faster product development.

The areas of collaboration can be worked out on VLSI, embedded systems, hardware or board design and small start-ups concentrating on circuit design and CAD simulation.

Semiconductor Hubs - India
In India, three proven locations – Bangalore, Hyderabad and Delhi/NCR region – have been exposed to global companies’ R&D set-ups with infrastructure and local government support.

Bangalore has housed 85 design companies with 30 captive offshore design centres. Nearly 57% of the VLSI designers come from the companies present in Bangalore.

Hyderabad has an extended local government support and is also likely to host India’s first semiconductor manufacturing facilities.

Delhi/NCR region is a proven destination for the start-ups which primarily involve in design activities. Entrepreneurship is something which the region can cheer about. About 30% of the VLSI designers come from this particular region.

UK and Scotland
Regions of South West England – Bristol, Bath, Plymouth and Gloucester - have a presence of several fabless semicon players, especially the start-ups. These companies are mostly focused on activities like high speed architecture and customized design.

Regions of South East England – Oxford, Southampton and Surrey – are focused on application engineering in the semicon ecosystem and have also come up well in hardware design.

Only one region in East England, Cambridge has a good number of semicon design companies focused on device and application based markets. Unlike south England’s trend of foreign investments, this particular region has a good presence of UK owned public companies.

Few cities of Scotland – Glasgow, Edinburg, Dundee and Aberdeen – have a presence of both US as well as local fabless companies. The government support is a primary incentive for aggressive investments.

The collaboration among these hubs of both the countries may result in setting up local fabs, improved market accessibility, venture capital investments and rapid development of highly critical products.

Indian Fab plant scenario
There has been a cumulative effort from Government and Industry to boost Semiconductor manufacturing. The Union Cabinet had earlier gave its approval to a special incentive package scheme for setting up semiconductor fabrication and other micro and Nano technology industries in India. Among the other countries that took a bold step in positioning their respective countries as hardware manufacturing destinations are Japan, Taiwan, China, Korea, and Singapore.

The government had also adopted a Fab policy that paves the way for what a multi billion investment opportunities in India.

But a section of investor believes that investing in fab plants in India did not make economic sense.

The semiconductor industry is also cyclical with wafer-thin margins. It takes at least three years for a company to break-even. China’s eight-year-old semiconductor industry is still not making profits. The poor infrastructure in India, and the possibility of low domestic demand, investors are cautious about their return on investment.

Fund raising is definitely an intimidating chore for companies planning to set up semiconductor fabrication plants in India. X