25 years earlier, India found its first software design center from the multi-national player, Texas Instruments, which had a special eye on simple analog design. The operation started small, creating software to automate chip design. Currently, it has become the company’s largest R&D center outside the U.S., designing chips end-to-end. Over the years many followed suit and today, India is an R&D hub for each of the semiconductor players including Intel, Qualcomm, Broadcom and NXP, and electronic design automation firms such as Mentor Graphics, Cadence and Synopsys. The country has come a long way since then and there’s more for it. “Typically semiconductor firms have expertise on designs with silicon but now the differentiation will be created through softwares, device structures, system architectures. In fact, to cut the chip design cost there would be embedded software automation and distributed model based designs,” says Walden Rhines, CEO and Chairman, Mentor Graphics. In this new paradigm, India stands to gain. The country has always been strong on software and with more software creeping into the chip designs, India’s competency is leveraged.

Initially, it was the low cost that turned the chip industry on, now, as Rhines says, “It is more about finding the software rockstars for product building in the opportune land.” Half of the masters and 71 percent of the PhDs in electrical engineering from U.S. universities are foreign nationals. In 2000, the number of foreign nationals who remained in the U.S. after they finished their doctorates was about 97 percent. However, while contributing to the companies and the U.S. economy, these highly educated graduates must wait for years for their green cards, putting their lives in limbo. As a result, there has been a massive transition since, and today, a number of foreign nationals with PhDs are increasingly heading back to their own motherlands, especially to China and India.

Thumbs Up to more Startups
The author of ‘The World is Flat’, Thomas Friedman, once while reasoning out the importance of the high-tech foreign workers for a more competitive America said, “Not only do our companies need them now, because we’re not training enough engineers, but they will, over time, start many more companies and create many more good jobs than they would possibly displace.” Silicon Valley is a living proof of that. But those high-tech rockstars are steadily returning back, enhancing the product talent pool, who are being readily absorbed by the MNCs, with India being the best place.
Rhines pinpoints, “It was always preferable to hire Indian engineers than their Chinese counterparts as, if you hire and let 5-6 Chinese engineers work in a process for six months, they would spin off and start their own company. Now, a similar trend is catching up among Indians too.” This implies a chain of product startups lining up in the near future.

And why not? After all, as Rajiv Kapur, Managing Director, Broadcom India says, “The revenue per employee is the highest in the country compared to anywhere in the world.” It’s an encouraging statistic, for anyone to start-up in India. In fact, for those who are mulling on a product start-up in the semiconductor realm, there’s more good news. The industry is rapidly climbing up, for instance, it grew 15.6 percent in 2009 while the global market shrunk by 11 percent.

The Product Challenge
The positive vibes linger all around, however, when it is about product-centric strategies, a number of challenges haunt the country. “There are no offbeat product innovation from Indian designers which could be recognized worldwide,” says John Cooley of Deepchip.com. The country, itself, does not entertain product startups, considering the IT services tag attached to it. Easy and quick revenue models are appreciated more, and considering product models take time to prove its revenue generation potential, the funds too do not comes its way. The discouragement at times forces many product firms to get a portfolio change and end up providing IT services.

India has poor infrastructure, low literacy levels for many people, and labor inflexibilities. So, high-volume manufacturing has not taken off yet in a big way and adding onto it are certain typical traits of the Indian workforce, which fails them to showcase their innovative streaks even within companies as employees, let alone as entreprenurs. The key to innovation is brainstorming of ideas, however, “People here are not akin to idea sharing. For instance, it took me one year to make my team enthusiastically participate in brainstorming sessions on ‘how to ensure more product innovation in India’,” says Neeraj Paliwal, Vice President and Country Manager, NXP Semiconductors India.

Nurturing the Innovative Streak
Innovation is just on the edge. The creative streaks of the Indian designers are yet to be recognized and nurtured. “Personally, to highlight their knowledge VLSI designers should go more online and online in this phrase does not connotate being socially active in Twitter and Facebook, rather more on tech websites and forums,” says Cooley. More social participation, wherein they can actively suggest solutions to peers worldwide, will benefit them to get a better know-how of the market. At the industry level, the leaders of the product firms are also providing a helping hand to encourage the innovation within their Indian workfrorce.

As the Mentor Graphics Chief maintains, “The product strategy is all about getting them more involved. For instance, creating an analog design tool, with bits of the project spread all across the globe including a part of it in India. This wouldn’t create any interest in the Indian centers. They look for more challenging roles and hence, when we entrust the entire tool production process to the Indian centers and the brainstorming goes beyond limit.”
This tactic has shown valuable results. The best example would be NXP’s low-powered integrated circuit - NXP MPT612 IC, entirely built by the India team. The circuit ensures 98 percent efficient power extraction in Solar PV Applications. The team joined hands with independent design houses and also indulged in informal peer reviews, as well as innovation concept budget and protection via patents and non disclosure agreements. Such feats of innovation have been shown time and again. Another instance of a great feat of innovation would be when Texas Instruments’ India center delivered the first mobile phone ever built entirely in India, TI’s AR7 DSL modem. The modem is on a single chip, digital signal processor (DSP) - based digital media processors and affordable motor control DSPs. Several of these single chip mobile phone technologies are being designed today in 45 nanometer (nm) processes across the world.

Point of Focus for the Firms in India
While innovation plays a great role to succeed in the semiconductor realm, the targeted market also plays a big role, especially India – the land of diverse problems. Firms in the semiconductor space were more inclined to reach out to the international market, sorting the problems globally. Due to this approach, they missed out on a potential revenue growth. Now, the strategy has changed, as for the firms, the new mantra is solve the local problems first, and later, go on to address similar international problems. Semiconductor companies in India are on trials to exploit the complexities and achieve the remarkable 35 percent annual cost reduction – a standard set by the high tech industry itself.

Currently, in India the next phase in semiconductor market revolves around one fact – create solutions to make the Indian consumers’ life easy as the semiconductor consumption will thrive incessantly. Paliwal, pinpoints at the China situation 10 years back. “Their consumption of semiconductors was around five percent of global production. Today, it is close to 20 percent,” he says, while eyeing the statistics that China accounts for a fifth of revenue for all semiconductor players. Paliwal expects a similar consumption road for India, which will explode in the next decade.

To explain further, Srini Rajam, the Founder of Ittiam Systems mentions a small instance, which highlights the intensity at which technology is spreading across India. “My mom wanted to talk to her granddaughter in U.S. As soon as I handed over the phone, her face had an annoyed look. Why? Because she didn’t want to make a mere phone call rather a video call through Skype and see the new activity of the 11 month old kid,” says Srini. The next retort from her on the same scene took away all his pride as she said, “You consider yourself as a technology innovator, but see, there’s hardly anything you have done to make my life easy and that too which can be availed free.” The very next moment, Rajam was out of sight but he did understand – ‘Technology has reached a stage, where it is touching more people in India than earlier and to an extent that even grandmothers have started apprising on business models’. Hence, the next turn in semiconductor has to be – solutions which are “Made in India, Made by India and Made for India”.