EB: What are the current global trends in the semiconductor market?
The current global trends in the semiconductor market are based on the key requirements of the public, which are in the fields of saving energy, healthcare, connectivity and security. Due to a huge population, the requirement for medical monitoring is increasing. Second, whether it’s a small digital camera or a big TV screen—saving energy is very important. Third, the world needs more security; so people need passports, driving licences and IDs. As a result, the demand for chips is also rising. Last but not the least, connectivity is important, as everyone wants things to be done speedily. Semiconductor companies are developing solutions in all these areas.
EB: So, if these are the factors driving the growth of the market, how is technology changing?
Technology is changing fast. We are developing processors that enable low power consumption. Starting from the beginning, one needs to modify the process to ensure that it is optimised to lower consumption of power. We need to develop new technology for healthcare, for particular consumer segments, Micro-electro-mechanical systems (MEMS) solutions in GPS, etc.
The lab-on-chip is a good solution for detecting influenza and other diseases. You can put a bit of your saliva on just one chip and within a few minutes find out if you have been infected with a particular virus. This is again a new technology at the micro-finish level.
Today, there is a huge demand for power, as one needs to drive a lot of engines and control motors. Sometimes, there is a need to work on analogue systems that require power to move and drive things, and then there is the need for digital power—to enable fast calculation and processing. On top of that, one needs memory capabilities and, therefore, flash memory has to be incorporated. Keeping all these needs in mind, there is an effort being made to integrate all the solutions on one chip to come up with the most suitable system-on-chip.
EB: How do you view the microcontroller market in India?
Microcontrollers have a very good market. Surprisingly, it is growing faster than we expected. Microcontrollers offer mass market solutions, which are being used by many small and medium sized companies in China and India. To address the niche markets, microcontrollers are being developed for many fields and applications. The volumes are generally not very high in such cases, but if you combine all of them, then you have a huge number of requirements for all types of microcontrollers. Today, the requirement ranges from 8 bit microcontrollers with low power consumption to 32 bit high end microcontrollers with enhanced capability and cost effectiveness. Because of their competitive cost, people move directly from 8 bit to 32 bit, skipping 16 bit.
India is today ripe for this market because it has such diverse industries. There is a requirement of microcontrollers in all major segments, such as lighting, motor controls, automotive, consumer durables, and we plan to develop solutions for many applications locally.
EB: What’s your take on the overall semiconductor market in India and what potential do you see in it?
There is huge potential which is linked to consumption in India. There is a growing requirement in the automotive sector because investment in this sector has started taking off in India. This will be applicable for the car body, dashboard, engine management, infotainment, etc, so more and more solutions will be developed locally. We are seeing a 40 per cent growth in our automotive revenue every year. In the next five to 10 years, the automotive business in India will become significant.
The Indian industrial, home appliance and lighting markets are also becoming strong. Microcontrollers have many applications in home appliances such as air conditioners, washing machines, dish washers and so on, for which local solutions will be developed.
In the consumer segment, set top boxes (STB) will always be important for the semiconductor industry. In the security segment, with the advent of e-passports, e-ID, etc, the semiconductor market will surely benefit, since, India is a high-volume market. Also, in the next 15-20 years, the growing importance of medical applications will impact the semiconductor industry.
EB: What is the total addressable market (TAM) in India?
We believe it is in the range of US$ 3-4 billion. In 2009, the market was worth US$ 2.7 billion, so 2010 should be higher.
EB: What market strategies are you adopting to capture the market?
We are trying to be close to our customers and are developing a strong distribution network. We specialise in microcontrollers, software and developmental solutions for the customer. We are developing our Web seminars for microcontrollers so that large businesses and technical communities could be made aware of our solutions. We are also trying to strengthen our relations with our customers, for which we have set up teams in Mumbai, Pune, Bengaluru and Greater Noida.
EB: Is ST open to partnering with Indian companies for business?
We have a strong record of successful partnerships. Since the last 22 years, we have built longlasting partnerships with key companies across the world. We have a good track record in setting up long term strategic partnerships with our customers, developing solutions, anticipating the needs of society—to be sure that we have the right products at the right time and at the right competitive price. We are open to partnering with companies in India for different applications, such as solar energy, lighting, electronics metering and smart cards. It could even be in our own field—for which we can even partner with our competitors.
We have realised that just having one product and putting it into the system blindly doesn’t work. We need to understand the requirements of the customers and then develop systems. The key issue is to be very close to your customer; that is why partnerships are important because the better you can anticipate the needs of the customers, the better solutions you can devise for them.
EB: The buzz words today are
e-governance, e-passports, e-driving licences, etc. In India, that’s a big market. Are you looking forward to partnering with any of the companies in this sector?
We try to provide every potential player the right solution in the form of our hardware silicon chip and operating system. We are ready to partner in this area as well. We have very competitive and very advanced solutions with us and we have been providing e-solutions in many countries for the past 10 years.
EB: How does the Indian market compare with other Asian markets?
The Indian market is still small compared to the size of India’s population and its requirements. But I believe this is changing fast as a lot of companies are moving their manufacturing bases to India. Telecom manufacture is already happening in Chennai, and a lot of companies are also developing their R&D in India. I believe that India is starting to really deploy manufacturing and R&D strategy for the next 10-15 years. If India moves strongly in the right direction in developing its R&D and manufacturing facilities, it would be a fantastic market in the coming 5-10 years.
EB: How do you plan to take advantage of the opportunities in India?
We have been in India for more than 24 years. We are one of the leading suppliers in India and have a good distribution network. A lot more of our distributors are moving into India. We have been continuously investing in our R&D here. We’re in a good position to explore more opportunities in Greater Noida and Bengaluru. Some of the applications in STB and TV have already been developed in India.
EB: What kind of challenges have you faced while doing business in India?
The territory is huge and quite different in different provinces. We have to adapt locally every time. We are taking advantage of the specialties of different areas. Pune is more an automotive hub; Bengaluru is for consumer goods; Delhi for lighting, smart cards and metering; Mumbai for STBs, and so on. You really have to look at the country not as one place but as different places with different requirements, which need heavy investments and attention. We need to develop the capability of our team to create more hardware solutions rather than just software.