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February - 2008 - issue > Semiconductor

Upswing in semiconductor design and embedded software development in India

Praveen Acharya
Saturday, February 2, 2008
Praveen Acharya
Semiconductor technology and embedded software domains have been high-adrenaline work areas and thus a cynosure for techies in search of new challenges both in terms of the technology and market. In the last couple of decades, the semiconductor industry has witnessed some rapid changes along with an impressive growth. Gone are the days of vertically integrated semiconductor houses that did almost 100 percent of their entire chip program completely in house. That has virtually become a bygone era for the industry.

The global semiconductor industry is now organized as fabless semiconductor companies, design houses, semiconductor fabs, test houses, packaging companies, and embedded software and content providers. Traditional chip original design manufacturers (ODMs) have recently started adopting the Fab-Lite model wherein the fabrication and manufacturing part of their business is left to the parent company, while the design engineering and markets are addressed by the spin off entities. This may be close to the example of the space shuttle getting released from the booster rockets so that it can be free of heavy fuel tanks during the ascent to the target position. Furthermore, these Fab-Lite companies have gone into private holdings so that they can retain their agility and edge with respect to market dynamics.

The semiconductor industry is going through some significant changes, mostly in the direction of consolidation. It is expected that most of the integrated device manufacturers (IDMs) will go into Fab-lite model. The Fab-lite model helps the semiconductor industry to recover its operational costs by utilizing the original fabs to fullest capacity. In this change that is now sweeping the industry, the Indian semiconductor and embedded software industries are carving a niche in the design services and product development areas.

As challenges bring in opportunities, the complex chips are creating demands for expertise and volume in embedded software development. The embedded software development is getting specialized for different market verticals like automotive, consumer electronics, and industrial automation, and is turning out to be as fast paced as the Very Large Scale Integration (VLSI) sub industry. Traditional chip companies (ODMs) are aligning with embedded software partners who can work with them in creating solutions for these market verticals. The business models are interesting and evolving for both risk share and profit share.

It would be worthwhile to have a re-look at the idea of having ‘India Captive’, where the situation is not similar to as it was 20 years back. The challenges of talent, growth, and finally investment to profitability conversion have grown multifold in recent years. Indian design houses also have a significant role to play in educating their customers towards making such decisions.

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