"India will Remain One of the Fastest Growing Regions"





"India will Remain One of the Fastest Growing Regions" Date: Tuesday , December 01, 2009 With ongoing economic turmoil affecting the companies in the electronics sector badly, there has been direct or indirect impact to the Indian economy as well. However, India will, in particular, remain one of the fastest growing regions; there is an increasing semiconductor usage as the market for electronic products such as PCs, digital consumer appliances, and mobile communications continue to expand says Hanns Windele, Vice President, Europe, Mentor graphics in his interview with the SmartTechie. Can you share some thoughts on the global semiconductor market in the coming year? The current economic contraction will affect all companies in the electronics sector. Directly or indirectly that will impact the Indian economy as well. But this downturn is different from a typical semiconductor down cycle. It has its origins in an over-leveraged financial system rather than in surplus inventory, too much of fab capacity, or lower unit volumes. The semiconductor industry is a supply-demand based industry and therefore it is one of the industry segments on which the current economic downturn will have its effect. However, the impact will be so bad as expected by many only if the financial system becomes completely unstable. For sure, the semiconductor industry will quickly enter the allocation mode again as soon as the economy picks up since there is no backlog and fab capacity has not been built up beyond need. India will, in particular, remain one of the fastest growing regions; there is an increasing semiconductor usage as the market for electronic products such as PCs, digital consumer appliances, and mobile communications continue to expand. What in your perspective are the focus trends and key insights for the Indian market? India has one of the fastest growing semiconductor markets in the world. We see a strong growth trend in the Indian market due to the accelerated development of the domestic electronics industry. This growth is mainly driven by an over-proportional increase of the disposable income of a fast-growing middle class in India. As a result, you experience an exploding demand for mobile handsets, PCs, and cars (and automotive electronics) – all of them incubating the entire semiconductor industry. Just take the mobile phone business in India as an example: There are more new subscribers here than the whole installed base in the saturated markets in North America or Europe. Stronger demands for semiconductor design services, increased activity levels in design centers in India, and a steady growth in design activities are other driving factors for India’s electronic industry and its suppliers during this year. The number of design projects in India based IC design centers is increasing. Outsourcing of projects from IDMs to design service providers in end user segments such as wired and wireless telecom and industrial and consumer electronics will stimulate the service activities further and will also increase the local know-how in this market. We will also see a continuous increase in test and verification activities within the design centers. We expect a lot of opportunities that will continue to emerge in the long run from the Indian market. Many businesses are founded during downturns, and with innovative strategies they will grow exponentially as soon as the recession ends. New products in the area of low power as well as products that help increase yield and reduce the per unit cost will be in demand as soon as the recovery kicks in. Is recession hitting this sector, if yes, what are Mentor’s plans to tackle the recession in this sector? Mentor has more innovative and newer technologies and products than any other EDA company. A modest downturn in EDA will force consolidation, and given our rich portfolio We have a strong growth momentum in this region and we expect it to continue, independent of the current phase of the economic cycle. Times like these are an opportunity to leverage disruptive technologies and to commoditize the recently emerging ones. For example, I now anticipate a rapid adoption of 45nm and 32nm nodes by electronic firms seeking to stay competitive. We are well positioned to support the growing demand in the automotive, mobile, telecom, and consumer segments. What is the biggest challenge to overcome as your company grows from year to year? We are successful when our customers are successful. Our job is to help our customers successfully overcome today’s and tomorrow’s electronic design challenges. We need to be able to support our key customers during this difficult time, and this will, to a great extent, determine our future success. This type of customer relationship enabled us to outgrow the market in the past – in Europe we are now the number one EDA-solution provider – and we make sure this will continue. We focus on areas that are vital to product development efficiency ESL (Electronic System Level) design, where, for example, our solutions help at an architectural level to address power consumption issues. In the functional verification area our solutions are essential to improve design quality. On the physical level our offerings are essential for cost-effective production, as they address design-to-manufacturing flows and yield enhancement. Are semiconductor companies doing enough to stay innovative and profitable at the same time? Some do and some don’t. The time is over where the entire industry grows or shrinks at the same pace. Looking at the semiconductor industry today, you find companies that do very well even at tough times and some that don’t. The right product at the right time is more important than ever. Innovation is the name of the game in any industry and, of course, also in the semiconductor industry. You can only stay profitable if you are able to differentiate your product offerings from the competition. Innovation is the enabler for such differentiation. As in any downturn, companies will have to put effort into reworking and redefining their products and methods (during periods of peak demand there is little time to do this, though it’s a useful process) to make them more efficient. Companies that review their business and focus in those areas where they can exploit their strengths, or enter new market spaces that require similar expertise as those in which they currently operate with success, will remain profitable.