IT hardware has been the major segment for semiconductors in India till recently. However, manufacturing of telecom equipments such as mobile phones and infrastructure equipments like Base Transceiver Stations (BTS) and usage of smart cards are driving the demand for semiconductor chips in India. According to the ISA-Frost & Sullivan update report, the Total Market (TM) revenues for semiconductors in India during 2006 were estimated at $2.69 billion.

According to Poornima Shenoy, president, Indian Semiconductor Association, "The announcement of the Semiconductor Policy 2007 will see the opening of doors to global investors in both chip manufacturing and its ecosystem and related hi-tech manufacturing. The top 4 semiconductor products that are expected to drive revenues are microprocessors driven by desktops, notebooks and telecom equipment; analog driven by mobile phone, monitors and UPS; memory driven by desktops, notebooks, servers and telecom infrastructure; discrete driven by TV and audio systems and energy meters and converters, mobile and telecom infrastructure."

Smaller chips in demand

Smaller chips with higher capacity and lesser power consumption are in great demand and are becoming increasingly ubiquitous. Also, new capabilities, including micro electromechanical systems (MEMs), such as sensors and actuators and digital signal processors that enable cost reductions and extend IT into new types of devices, are being added to the chips.

The growth of mobile applications such as media players has been driving the culmination of microprocessors and digital signal processors, using the best of both technologies i.e. number crunching and signal processing. Micro electromechanical systems based sensors are a crucial component in automotive electronics, health care monitoring, smart portable electronics such as cell phones, PDAs, hard disk drives, computer peripherals and wireless devices.

New emission norms, safety requirements, increasing adoption of micro controllers in the two wheeler segment will drive the use of semiconductors and embedded solutions in the auto sector. Smart cards based projects like the national ID card, e-passports and driving licenses will call for increased expenditure on chips.

Players like NXP, ST Microelectronics, Samsung, eInfochips and Freescale are coming up with latest technology enabled semiconductor chips for the Indian enterprises.

Growing consumption driving growth

According to a report, the top five end-user products that are expected to drive growth during the forecast period (2007-2009) are mobile handsets, desktops and notebooks, GSM base stations, set top box and energy meters. Along with this, the consumer electronics manufacturers have also started using these chips for washing machines, LCD TVs and other devices. The national ID cards, driving license cards, ATM cards, para banking sectors are further escalating the growth of semiconductor chips in India.

Says Pradeep Kumar, marketing head, ST Microelectronics, "ST has been traditionally a semiconductor supplier which has been supplying chips/modules to card manufacturers and system integrators in India. The availability of a broad range of leading edge non-volatile memory technologies supports the development of high performance, cost effective smart card chips."

Growing consumption and production of electronics across sectors is driving the growth of semiconductor chips in India. Automobile and component manufacturers are also major targets for the chips manufacturers.