Global semiconductor industry: India to buck the trend
Sharp drop in US consumer spending has begun to hurt global semiconductor industry. But India will buck the trend. Cyber-Spaced out
By Neenu Abraham, TNN |
BANGALORE: A sharp drop in US consumer spending, driven by high energy prices and the subprime turmoil, has started hitting the global semiconductor industry. However, the scene in the Indian semiconductor industry is slightly different. AMD India vice-president and MD Alok Ohrie says, ���Chip growth is dependent on consumer demand. In India, with a reduction in income-tax for the salaried classes, we will see a surge in the uptake of consumer electronics like PCs backed by increased spending power of consumers.���
���Most verticals will remain unaffected by these market lows. The market for most multinational chip companies will shift to emerging countries like India, China and Brazil,��� he says.
On a similar vein, it is expected that the manufacturing segment likely to be less impacted. India Semiconductor Association (ISA) president Poornima Shenoy says, ��� There is hardly any manufacturing of semiconductors (ICs etc.) in India today. The EMS (electronic manufacturing services) companies in India source most of their requirements of ICs from other countries. In this respect, we feel that the Indian semiconductor industry has not been impacted much as a result of reduced American consumer spending.���
She, however, adds that the reduced American consumer spending could possibly affect Indian companies engaged in the manufacture of electronic components and consumer electronic goods targeted for exports to the US.���
���Most verticals will remain unaffected by these market lows. The market for most multinational chip companies will shift to emerging countries like India, China and Brazil,��� he says.
On a similar vein, it is expected that the manufacturing segment likely to be less impacted. India Semiconductor Association (ISA) president Poornima Shenoy says, ��� There is hardly any manufacturing of semiconductors (ICs etc.) in India today. The EMS (electronic manufacturing services) companies in India source most of their requirements of ICs from other countries. In this respect, we feel that the Indian semiconductor industry has not been impacted much as a result of reduced American consumer spending.���
She, however, adds that the reduced American consumer spending could possibly affect Indian companies engaged in the manufacture of electronic components and consumer electronic goods targeted for exports to the US.���
| | Also read |
| �� | |
| �� | |
| �� | |
| �� | |
| �� |
However, India has also the presence of large number of semiconductor design companies and these could be impacted by global events. According to a recent KPMG survey, 33% of the global semiconductor players surveyed said profits would be flat, 26% said it would be volatile and unpredictable, 15% said profits would decline and only 27% said profits would rise.
Ms Poornima added that growth in profitability of the Indian semiconductor companies (design companies and embedded software companies) would be impacted by the rupee appreciation.���
As regards revenue growth, she says: ���We feel that our Indian semiconductor companies should post revenue growth in the next fiscal year. Most of the top global semiconductor companies have chip design / development centres in India. Their captive centres have gradually moved up the value chain.
Many global semiconductor industries seem to be on a consolidation mode like the recent acquisition by Synopsis, a company which specialises in software and IP for semiconductor design, of Synplicity, a supplier of solutions for the design and verification of semiconductors.
ADVERTISEMENT
Says Synplicity vice-president (corporate applications engineering) Jim Robinson, ���Consolidation is a way to push up revenue. Synplicity stands to gain by this merger as managing a small company and at the same time meeting Wall Street expectations is tough. With the acquisition, Synplicity, which has an employee base of 300, will now be part of the 5,000-odd employee base of Synopsis. ���This merger assumes significance as the Indian Development Centre of Synplicity, which houses 30% of the global R&D staff, is the second biggest outside the US,��� says Synplicity Software (India) managing director Dr HV Ananda. The electronic design automation (EDA) segment, to which Synopsis and Synplicity belong to, is also likely to be affected by the developments in the global semiconductor space. ���The EDA space sees far more consolidation compared to the semiconductor space,��� says NXP Semiconductors vice-president and managing director Rajeev Mehtani. Almost all chip design companies, including NXP Semiconductors, extensively uses FPGA and ASIC products.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
