Saturday, January 20, 2007

Innovation..only way ahead for Indian Semiconductor Industry

Last evening, I was fortunate to attend a meeting where the “father of the Pentium” Mr Vinod Dham addressed a bunch of enthusiastic entrepreneurs at Hyderabad. Organised by the Semiconductor Special Interest group ( SIG) of the TiE Hyderabad chapter, it was a freewheeling 2 hour discussion –very ably moderated by Mr J A Chowdary, Mr Dham elaborated a lot of issues with a lot of clarity.

Some of the key issues I could take away from the session were as below:

-The semiconductor industry –since its inception about 4 decades ago-is going thru some fundamental changes. The migration of the wafer size from 8 inches to 12 inches-and the reduction is die sizes from 130 nanometer to 90 nm- and an increasing possibility of it going down to 65 nm soon-the economies of cost to scale is drastically changing.

-With the increasing capacity of chip production globally, the challenge is to shift the mindset from selling chips to selling applications. A different approach is needed to create the perceived value in the consumer business, where the customer pays for value and not technology!

-Indian industry would do well to invest its capacities in innovatively solutions-rather than trying to recreate manufacturing capacity in semiconductors! Mr Dham is of the opinion that instead of setting up factories @ 4billion dollars, it would be more fruitful in building alliances with the Intels and IBMs of the world to help them set up shops here –and concentrate on creating more talent in designing –which Indians are known for globally!

-there is a tremendous shortage of chip design engineers – the present crop just accounting for less than one sixth the demand likely ! There are opportunities in creating institutions a la NIIT for training and inducting fresh talent.

-India has a fantastic talent pool of intellect –what it lacks is the middle management and the leadership to harness the same. While Mr Dham felt that ‘ the returning Indians’ could easily fill this gap of the necessary mentoring and handholding, he was very skeptical about the increasing cost of life in India( real estate, education, and the aspiration of a returned India to try to recreate the ‘comfort zone of a US lifestyle”)- negating the cost efficiencies. He quoted instances of his needing to pay almost US dollar to dollar salaries for relocating top professionals to India!!

-Mr Dhams new venture fund – where he is joined by Ms Vani Kola and Mr Kumar Shiralgi –NEA Indo US fund will be to “manage strategic equity investments in early and mid-stage companies in the IT and BPO/KPO segment in the Indian and Indo-US corridors.” He hinted some very interesting tie ups with some premier institutes like IIT Kharagpur and ISB Hyderabad- which would spawn a lot of future creative hotshops- and startups –which would be the future success stories that would shake the Indian psyche of ‘security’ and inspire entrepreneurship as a chosen path!

I guess I could go on and on! The interaction threw a lot more pointers

-India Inc would do better to provide the 527 million of youth (below 25yrs today) in India-a better future if more jobs were created by the creation of a “global manufacturing hub” rather than focussing on IT also..which allows only a miniscule single digit millions improve their quality of life!

-the causes of attrition in IT industry ( opportunities, mismatch of aspiration & ability , the bench phenomenon of IT services organisations)

-existence of little known “ not for profit VCs” who would be perhaps content with 1.3x returns –on “socially improvement businesses’ rather than the highly visible VCs hungry for 10x returns and looking at only globally scaleable out and out commercial projects!

-the IT companies would do well providing more internships to students – and help train a better workforce than the present practice of Indian students doing ‘dummy projects’ and being inadequate to ‘hit the ground running’!

TiE Hyderabad chapter must be commended to arrange such sessions –which I am positive..will help create the right ecosystem !


Gautam Ghosh said...

not for profit VCs? Wow !

ggop said...

Hi there,
Most fabs of big companies already are evaluating 45nm processes right now. :-)