Archive for the ‘Case for Semiconductor Product Companies’ Category

Case for Semiconductor Product Companies

April 2, 2007

semiconductor labIndia is expected to consume electronic equipment worth $363 billion by 2015 from $28.2 billion in 2005, pushing the total market for semiconductors to a whopping $36.3 billion by 2015.

According to semiconductor market research reports by India Semiconductor Association (ISA) and Frost & Sullivan, the semiconductor-driven industry is expected to create over 3.5 million jobs by 2015.

Although all these numbers sound good to hear, it will be nice to see the bulk of these 3.5 million jobs to be in direct product development than services. In order for India to move up the semiconductor value chain, we need to focus on innovation as opposed to servicing. Ironically, one strong factor that is in favor of product development is the India’s population.

We have a billion people and if we could create products that can target these people, we wouldn’t need to be “helping” US or Japan in creating world-class products that are eventually targeting Americans and Japanese consumers. The point is that we won’t have to depend on forces outside of our borders when we have a huge indigenous market.

Unfortunately, most of the indigenous semiconductor companies are service oriented. Take a Wipro or a Sasken or a Mindtree for example. All of these companies are working for other US biggies. Perhaps this makes more business sense in the shorter term.

There is probably a handful of India-based VLSI companies doing products for the local market. The usual complaint is that the market is still in the US or Japan. We need to create amarket in India – just as Apple does so often in the US and the rest of the world. I am sure our Wipros can take on the biggies of the world!