TiE-ISB Connect 2006 - Semiconductor Track Summary

The theme of the Semiconductor track was about the opportunities and challenges in this industry, particularly from an Indian perspective. Surya Hotha from Broadcom, the track chair, started by talking about the TiE Hyderabad Semiconductor special interest group as a initiative to support budding entrepreneurs interested in pursuing this vertical. The question on everybody's mind was, "Is the opportunity we talk about, for real?" Does India have the potential, the talent pool, government support and the entire ecosystem to make this work?

The session started with a candid presentation from Bhavin Shah, an analyst from JP Morgan. He stated that the industry had evolved to a point where specialization was the means to success. While practically every south asian country has tried its hand at Semiconductors, only Taiwan and Korea have been able to create value. Korea focused on high volume memory chips and Taiwan has invested heavily in manufacturing, back end and foundry services. These being human capital-intensive operations, they have successfully used Employee stock grants to keep the labor force motivated. Another factor that contributed to their success is the return of US trained semiconductor experts to Taiwan in the 80s, which India is experiencing now. While he wasn’t convinced about the manufacturing boom, he did leave the audience on an optimistic note by pointing to opportunities in specialized services such as solar cell manufacturing and IC design. Aurangzeb Khan, the VP Market development from Cadence design systems, was the keynote speaker. His message was, 'Convergence drives integration'. In the competitive environment today, a silicon manufacturer has to be capable of providing a system solution inclusive of software, drivers and reference designs. The keynote was followed by a panel discussion. The panelists were Dr.Kumar Shiralagi (Intel Capital), Kishore Manghnani (Marvell), Stacy Fender (Xilinx), B.V.Naidu (STPI), Dasarath Gude (AMD), Venkat Vankayalapti (Cavera systems), Moderator: Surya Hotha (Broadcom). Following is a brief from this discussion:

 

Q. What are the opportunities and challenges for Indian Semiconductor industry?

Venkat: There are lots of opportunities for India in chip design and embedded design services, especially in the Communications, wireless, optical, applications.

Kishore: Do not restrict to India, look at it from a global perspective. VOIP services have grown tremendously in the last 2 years. The challenge is to figure out how these startups in India compete with others. Comparing to the Taiwan companies, they had no presence in the US, but their local market was strong.
On the other hand in Israel, most of the semiconductor firms have a huge presence in US. In the current industry trends it is essential to have presence both in India and the US.

Aurangzeb: An upcoming area is Lighting technologies, thought it might not be as glamorous. That is yet another area which has huge growth opportunities.
Naidu: India has done well in services. The growing Indian manufacturing industry, the local market and the design base that most MNCs have in India provides the semiconductor industry in India the triple advantage to succeed.

 

Q. Where do you see the funding coming from for these new startups in India? Naidu: To set up a semiconductor Design unit, it takes $20-25 million. The government provides aids in indirect forms such as exemption of corporate taxes. STPI has also taken up new programs such as the incubation program wherein the government invests up to 35% in building up of corporate infrastructure. Currently, Indian develop IP but don’t own it; we are encouraging Indian companies are also encouraged to file IP’s. 

 

Q. What is the Xilinx Corporate VC fund about and how can it help entrepreneurs?

Stacy: We focus on areas where we can learn alongside the companies we support. We intend on funding ventures that are strategically aligned to our goals and that help propagate our ecosystem of programmable logic. 

 

Q. On Building Industry and Academia relation.

Kumar: Intel plans to train a million teachers on IT by 2010. Centers of excellence have been set up at major institutes to improve the design curriculum and provide design tools.

Gude: Back in 1993, there was no VLSI talent in the country. I am proud to say that we established a college that focuses on design and produces the bst of the breed.  
Stacy: Xilinx has started a internship program with IIT. They also offer VLSI and SMDP programs. In 32 different institutions. 

 

Q. What advice would you give to budding entrepreneurs

Kishore: The core team of any entrepreneurial firm is very essential. Apart from this, good source of capital and an established customer base is essential.
Gude: One doesn’t need to have large source of money. One can build small subsystems or sell an idea at first, then reinvest the revenues to build larger businesses.

Aurangzeb: Try and develop skill sets that set you apart from others.

Kumar: Intel capital looks for businesses that pose as a good financial return opportunity and as a strategic opportunity. A few companies that Intel capital has invested in are Tejas networks, Insilica and Vignyani. Intel has also focused on educational and rural PCs.    

 

The session ended on a positive note where everyone agreed that there is an opportunity, be it design services, testing services, manufacturing, etc. Problems such as building a talent pool, an ecosystem and funding need to be addressed to ensure the success.