India needs to consolidate semiconductor space

BANGALORE: When it comes to availability and scalability of talent and talent cost advantage in the semiconductor design space, India rules among its peer countries, says the ISA-Ernst & Young Benchmarking Study: `India in the Global Semiconductor Design Ecosystem’. However, the country now faces challenges including improving quality of talent and maintaining cost competitiveness in order to sustain the fast paced growth of the sector.

Sunil Bhumralkar, Director, Ernst & Young India said, ``talent cost advantage and availability & scalability of talent are the key factors that give India the competitive edge over other countries as a preferred destination for outsourcing semiconductor design services. However it is imperative that we understand and address the challenges faced by the industry like robustness of IPR regime, quality of talent, quality of technical education, and maintaining cost competitiveness to sustain growth.’’

The study was done in two phases. Phase I was a survey among 28 semiconductor design companies in India -- MNC, Indian and EDA firms which account for over 65% of total employees strength in the sector. The second phase was benchmarking India against seven peer countries -- China, Taiwan, Israel, Czech Republic, UK, US and Canada on certain parameters including talent-related factors, business environment-related factors and infrastructure related factors.

India’s ratings were very favourable, according to Sunil Shenoy, senior manager, E&Y India who led the study. While the country was rated `high’ in availability & scalability of talent and talent cost advantage, it rated `moderate’ in quality of talent, quality of technical education, legal/IPR regime, maturity of semiconductor design sector, semiconductor market potential, quality of business environment and advantage in other operational costs, and `low’ in availability of good physiscal infrastructure.

According to the ISA-Frost & Sullivan report, the Indian VLSI and embedded design sector in 2005 was estimated to be worth $3.2 billion and is expected to grow to $43 billion by 2015.