India Semiconductor Association

BANGALORE, INDIA: India is destined to become the second largest consumer market as it gets globally integrated. India will also attract large investments in manufacturing, infrastructure, energy and defense.

The country's future will be shaped by both Indian and foreign enterprises as government policy encourages foreign direct investment (FDI). This decade will also witness the spectacular growth of India’s public sector enterprises. These are among the many observations of Dr. Jagdish N. Sheth, founder, ICA Institute and Charles H. Kellstadt professor of Marketing, Emory University.

Delivering the session keynote on Opportunities in the next decade, during the ISA Vision Summit 2010, he added that the economics of the semiconductor industry dictates both volume and speed advantage. Therefore, it must focus on volume driven consumer markets with trickle up innovation. Affordable devices will become increasingly disruptive. It will become increasingly desirable and strategic to hub the industry in India. Dr. Sheth added that in future, Bangalore itself could transform itself from being the IT capital to the aerospace capital.

Earlier, he pointed out that while the 20th century was driven by government policy of advanced nations, the 21st century will be driven by competitive markets of emerging nations.

The new measure of economics today is purchasing power parity (PPP). The forces behind the shift are geo-economic re-alignment of the world, India's second independence, 3D advantage -- democracy, demographics and development, while a poosible fourth -- discipline, needs to be added, and the new middle class or the call center couple.

While the old triad power comprised the USA, European Union and Japan, the new power comprises USA, China and India. Hence, the 'Chindia' factor. It is advisable for China and India to get together, rather than compete. China will eventually become India's largest trading partner. Also, the Asian economy will itself become much bigger.

So what is India's growth story? It is a combination of several things, such as:

• Second largest consumer market.
• Manufacturing hub for South Asia, Middle East and Africa.
• Global R&D moves to India. In this regard, the Indian semiconductor industry will go to two extremes -- developing high end products for defense, etc., and low-end products for consumers.
• Rise of defense industry.
• Growth of public sector enterprises (PSEs). They are going to be the largest buyers of technologies. The PSEs are the largest consumers of electronics.
• Infrastructure and energy.
• Computerization of government bureaus.
• Emergence of Indian multinationals.

There will be a fundamental shift in technology. In fact, the two drivers of innovation will be digital technology and emerging markets. Here. Dr. Sheth pointed out that entertainment will go on to become the largest market for electronics.

The analog based ICT industry was earlier non integrated in nature. Now, it has become a truly digitally integrated ICT industry. Digital electronics has created integration among the standalone industries. He added that devices will be the key revolution in the semiconductor industry, more than the infrastructure side.

He listed several implications for the semiconductor business. These are:

• Market shifts to Asia.
• Devices will drive innovation.
• Trickle up innovation.
• Accelerated pace.
• Internet becomes universal, which is a given factor.
• Video: The next frontier.
• Low cost innovation for emerging markets.
• Defacto standards through licensing.
• Emergence of disruptive technologies, happening largely and more out of Asia.

The best innovation has got to take place in the consumer market. Video, and especially, 3D animation, will be the next frontier. The power of semiconductors will shift to Asia. Video will be the driver.