For the past few years, India’s semiconductor industry has been transforming at a massive scale with the help of various schemes and initiatives unleashed by the government. But, when we speak of infrastructure, the nation has only one foundry and OSAT. There are infrastructure challenges (continuous power, water) in maintaining such manufacturing units. The PLI scheme can help build more foundries and OSATs in India to support end-to-end solutions development. While we can create such manufacturing units by addressing these challenges, nurturing the ecosystem is critical to sustaining growth in this industry. Supply and demand is dynamic in the semiconductor market, though it is on the uptick for the most part. So, creating an ecosystem that can withstand such market pressure yet continue operations and keep up with the technology roadmap is key. India should work on short/mid/long-term goals to reach the top in this segment, feels experts. In this scenario, we spoke to Sathish Kumar Ganesan, Vice President & Global Delivery Head, Cyient about how India should develop its semiconductor infrastructure and why the short-term goal should be to ramp up the manufacturing services sector (OSAT, test facilities, infrastructure).
Q. With the unleashing of the PLI incentive of $10 billion, India is now aiming to become a global semiconductor manufacturing hub soon. In this regard, what are the various current challenges you think the region is facing amid the pandemic? What are the various steps required by the Nation to ease the situation?
PLI is a great initiative by the Government of India. I strongly believe that such support systems will give rise to many more indigenous companies in IP design, ASIC development, ATMP, and end-to-end solution providers. Our short-term goal should be to ramp up the manufacturing services sector (OSAT, test facilities, infrastructure), which will provide entry into the key ecosystem and enable us to learn and grow along with the industry roadmap. (2) The mid-term goal should be to set up the core technology nodes (16nm to 40nm) to cater to the majority of the market in terms of industry segment but do it aggressively and quickly to keep pace with the industry roadmap. (3) The long-term goal should be to consolidate all the learnings from the short/mid-term goals and leverage them to create the complete ecosystem all the way from the foundry to supply chain management including OSATs and ATMP.
Talent Pool: Creating a talent pool with industry-specific knowledge is critical in the semiconductor space. In the current supply/demand situation, companies are trying to capture resources within the available talent pool, artificially inflating the cost of these resources. This will eventually affect India's “effective offshore cost” tag. This is unhealthy and unsustainable in the long run. Government and industry bodies should set up schemes to promote training institutes and equip them with the necessary support, such as industry-specific test cases via company sponsorship or an open-source environment and EDA tools. They should further mandate companies to hire a certain percentage of these institute-trained resources to help grow the talent pool and eventually close the supply/demand gap. This step will also help companies acquire new talent at a lower cost and sustain long-term growth.
Q. Do you think the latest PLI incentive package would strengthen Indian semiconductor manufacturing? How do you think it could be a game-changer in terms of innovation?
Yes, definitely. PLI is expected to boost domestic manufacturing and attract large investments in electronics components and ATPM (assembly, testing, packaging, and marking). Electronics manufacturing and ATMP are mainly happening in South-East Asia and to some extent in Europe and North America. Enabling domestic manufacturers with the PLI scheme will help them attract more customers with subsidized/competitive cost, build volume, and eventually sustain in the long term. This also offers India-based technology solutions companies opportunities for investment and building support systems such as OSAT, ATMP, etc., to nurture the domestic semiconductor ecosystem.
Q. Various experts are now claiming that the chip shortage would ease by 2024 and some are claiming it would continue until 2026. So, what are your views in this regard? What are the requirements to help it return to normalcy?
Cyient’s Semiconductor BU, part of the ASIC Turnkey department, sells IC chips to several customers. While we have seen quite a few delays on external components, there has been a definite improvement in supply over the past few months. It is hard to predict when complete normalcy will return. Still, we expect the situation to be close to normalcy in 12 to 18 months, provided the current foundry capacity is increased, or companies move/develop their design in alternative foundries to overcome capacity challenges.
To address capacity issues by enabling companies to move/develop their design in alternative foundries, Cyient Semiconductor has introduced a dedicated IC Development delivery unit with teams in EMEA/India. This will help companies to quickly port their IC designs from one foundry to another within a short time by utilizing our internal porting flows and quality management systems. Customers can use Cyient’s internal porting flows or re-use their proprietary flows for maximum reuse and time-to-market. This enables companies to continue their product roadmap despite supply chain issues. Cyient is currently helping multiple Tier-1 companies with IC Development service offerings to port IC designs to mitigate supply chain issues in a record time to meet time-to-market requirements.
Q. Is Cyient doing investments in India and other parts of the world? Can you please explain your international expansion plans and your revenue expectations?
Yes, we are investing in ramping our talent pool and the infrastructure worldwide. We have grown our worldwide resource capacity by 50% in the last two quarters. We have completed a couple of acquisitions in India—one in September 2021 with 70+ physical design engineers, and another in March 2022 with 110+ analog layout and physical design engineers. In addition, we are creating a state-of-the-art post-silicon validation lab in Bangalore by Q2 2022 to augment our existing labs in Germany and Belgium to support our global customers and India captive centers. Currently, we have 500+ engineers worldwide, including 100+ engineers in EMEA (Germany, Belgium, Netherlands, and Austria) and 350+ engineers in India (Hyderabad, Bengaluru, Pune), and the rest in North America. We have drawn up aggressive plans to double our capacity in EMEA and triple our capacity in India over the next 12 to 18 months to reach 1000+ engineers in FY23 and 1500+ engineers in FY24 worldwide.
Q. Can you please elucidate the business models of Cyient and what are your current strategies?
Cyient is focused on the five pillars of Digital, Embedded, Networking, Geospatial, and Semiconductor. It has developed end-to-end technology solutions integrating and customizing these five pillars for industry verticals such as aerospace and rail, automotive, communications, hi-tech, healthcare tech, mining, energy and utilities, and semiconductor. Our business models include onsite T&M services, fixed price services, ODC model, turnkey result-oriented programs, revenue-share model as well as risk-reward models.
With regard to semiconductor offerings, we address the complete market/industry segment with four distinct departments, namely ASIC Turnkey, IC Development, IC Test and Production, and IC Consulting. ASIC Turnkey focuses on ASIC development and part supply, including supply chain management, with special emphasis on non-semiconductor customers in automotive, industrial, and medical. IC Development focuses on IC design and porting with a special focus on fabless semiconductor companies with optional support for supply chain management and part supply. IC Test and Production focuses on industrialization (test, package, and qualification) and supply chain management for our ASIC customers and external customers who want only this service. IC Consulting focuses on traditional semiconductor services across all VLSI domains, staff augmentations, ODC, and COE models. With state-of-the-art lab facilities in Germany, Belgium, and Bangalore, and global delivery centers in EMEA (Germany, Belgium, Netherlands, Austria) and India (Hyderabad, Bangalore, Pune), Cyient’s Semiconductor BU is well poised to support global customers across all industry segments in semiconductor services.
Q. Can you please elaborate on the various kinds of semiconductors/chipsets you are currently producing? Globally, where do you see the semiconductor industry standing at this point and its growth potential?
We develop and produce ASICs for our customers across multiple industry segments, including health, industrial, automotive, consumer, and communications. We typically work on 10 to 12 ASICs and produce multi-million parts per year for our customers. We have built ASICs for our customers ranging from a wireless personal alarm system, energy scavenging ULP transceiver, and MEMS driver ASIC for a novel contact lens sensor to an ultra-low power RF-CMOS ISM transmitter and a 400MHz satellite transceiver for tracking wildlife.
The semiconductor industry is growing at an unprecedented rate and is expected to reach the trillion-dollar mark by the end of this decade. More than 70% of this growth is expected to come from automotive, computation, data storage, and wireless. The semiconductor industry has established its status as a truly essential industry for future growth of product developments across the industry. Given the digital transformation happening across all industries, semiconductor is becoming a true horizontal capability that can help drive this future growth.
Q. Kindly explain your roadmap for the coming five years.
Cyient Semiconductor, with combined skillsets of ASIC development, industrialization, and supply chain management, is uniquely positioned to offer our customers these diverse capabilities. We are looking to be the preferred engineering R&D solutions partner for our customers to power their future ASIC solutions. We are investing to triple our talent pool across EMEA, India, and NA in the next 12-18 months and actively investing in future technology solutions and industry offerings. At Cyient, we want to prepare our customers for the transformation required for the megatrends of Smart Well-Being, Intelligent Transport, Smart Manufacturing and Operations, and Sustainable Business. There is significant demand for ASICs and VLSI solutions as part of these transformations. With our cross-functional capabilities in digital/embedded and industry knowledge across these megatrends, Cyient Semiconductor is poised to be a preferred partner to our customers, supporting their journey from “Silicon to Platform Solutions.”