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February 05, 2007

In-Stat: Growth Ahead for Integrated Device Manufacturing in India

The technology market in India has drawn the attention of some pretty big names in recent months. For example, earlier this month Cisco moved its Chief Globalization Officer, Wim Elfrink, and his seven member team from Silicon Valley to Bangalore.
The attention India is paid with regard to technology is not just focused on manufacturing, but services as well. Case-in-point: two recent partnerships (Reliance Communications + Yahoo! and Bharti Airtel + Google) are targeting the mobile services space.
This trend seems likely to continue, both within and without manufacturing. A new report out this week from In-Stat (News - Alert) backs up that claim. The industry research firm projects that India’s integrated circuit (IC) design services industry will continue to grow by more than 20 percent annually through 2010.
What drives that growth, and what will sustain it? In-Stat credits cost advantages and availability of skilled manpower. As is often the case, cheaper labor that can still get the job done is very appealing in the global marketplace. This fact of modern business is driving integrated device manufacturers (IDMs) to outsource their design activities to firms in India, or set up their own facilities in the country as Cisco has done.
“Indian design companies will continue to move up the value chain by increasingly accomplishing the entire design instead of doing piecemeal design work,” In-Stat analyst Mayank Jain said in a statement. “Captive centers of IDMs work on cutting-edge technologies and contribute to the development of products for a global audience.”

The growth of India’s IC design services market goes beyond mere yearly percentages, of course. A closer look at the number by In-Stat predicts that revenue for the industry in India will reach $2.45 billion in 2010, up quite notably from $869 million in 2005.
To support all the new design services, In-Stat projects that the base of Indian design engineers will grow from 12,352 in 2005 to 40,893 by 2010. Even that growth may not be enough to handle the demand, though. In-Stat notes that manpower will remain the main issue for the industry, which is looking to the academic sector to help fill the void.
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Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.


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