The Hindu Business Line : `Manufacturing, fabs will face a tough climb'

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Bangalore Jan. 22 The US-based chip design firm Analog Devices Inc (AD) has been one of the behind-the-scenes operators, watching as the semiconductor industry underwent transformations — both globally and locally. In India, it has evelopment centres in Hyderabad and Bangalore. At a VLSI conference held in the city recently, Dr Reddy Penumalli, Managing Director, Analog Devices India, had a chat with Business Line. Dr. Reddy is responsible for the company's India strategy and long-term planning.

What are the changes you have noticed in the industry over the past five years?

Chip design in India has changed. What used to be bits and pieces of work (projects) assigned to Indian firms by multinationals, has now turned a whole circle to become whole product development. AD's Shark processor family was completely designed out of India. Testing is also gaining in importance. Expertise in analog and mixed signal domains is also being developed here. In three to five years, we expect this design to proliferate.

What do you think of the new spurt in small chip design houses springing

This is a competitive business. Everybody's trying to reach the pot of gold at the end of the rainbow. The proliferation of consumer electronics devices has generated an opportunity for small companies. Small firms with good ideas that add value will succeed. They need specialised domain knowledge.

What do you think of the India market?

The overall semiconductor market here is still small. Expectations are high. We consume a lot of electronics. Unfortunately, the majority of them are not made in India. Taking into consideration the functionality and features, one would rather buy a cell phone made outside than a similar one that is double the price but made locally. The expectation is in a few years, some of that gadget manufacturing will shift to India. However, there are several hurdles. China and South East Asia have a huge lead. On the other hand, we have an educated workforce, which will mean a chip design industry of global standards.

What do you think India needs to become world class in chip design? Are we lacking in anything?

We need to develop expertise in analog and mixed signals. This is a niche area; there are few world-class experts in the world now. MEMS (micro electro mechanical systems) is another domain that has a growing market in the automotive sector. We can solidify India's position as a design centre if we can develop expertise in it. Manufacturing, and fabs (chip fabricating facilities) will face a tough climb to become globally competitive.

What will the focus of AD India be in 2007?

Our primary focus will be on power reduction in wireless devices (to increase battery life of gadgets), seamless transmission of high quality video on portable and wireless devices and signal processing. India is a little late in the adoption of latest video quality standards such as HDTV (high definition television). Once broadcasters adopt it and offer mobile TV, we will see a peak in our services.