Guides

The growing Indian economy is fueling a massive consumer boom. Demand for electronic gadgets, appliances and equipment is growing briskly—and companies are increasingly turning to electronics manufacturing services (EMS) firms to fill the pipeline.

Is India the next stop in the electronics manufacturing supply chain? Not in the near term, industry watchers say.

Even though the electronics manufacturing industry is still facing many challenges in China, OEM and EMS companies are looking to India as their next target for expansion.

Singapore-based electronics manufacturing services provider Flextronics International Ltd. has expanded its presence in India through the first phase completion of its planned eight million square foot industrial park in Chennai.

IBM said it would triple its investment in India to $6 billion over the next three years as the country becomes a cornerstone in the computer service superpower's global network.

The India Semiconductor Association (ISA)  unveiled a new semiconductor policy designed to attract further investments in the country.

Despite the recent hype about India’s being a hot destination for semiconductor manufacturing, global fab majors will stay away from India in 2007, predicts Gartner Group.

Although India has a reputation as a desirable location for semiconductor design, it has had a difficult time attracting investors to build leading-edge chip plants. That appears to be changing, however.

Several groups are attempting to set up chip foundries in India. Headed mostly by expatriate Indians who have worked in the U.S. technology industry, they hope to eventually replicate the success of Taiwan's $35 billion semiconductor industry.

The two economies are following different electronics development paths.

The Indian design business, including multinationals and domestic companies, is forecast to grow 23 percent per year, reaching $1.72 billion by 2010.

Sabare International, a home furnishings textiles exporter headquartered in the small South-Indian town of Karur is using RFID tags to reduce its operating costs.

Gather hundreds of chip designers and engineering managers in one location in Bangalore, India, and you will also find eager tech company executives trying to recruit scarce talent.

If China is the factory to the world, then India aspires to be the design capital. With its semiconductor design services industry growing at 30 percent annually, according to an ISA-Frost & Sullivan report, India is emerging as a key destination for integrated circuits, field-programmable gate arrays and system-on-a-chip designs.

With the $3.25 billion semiconductor design services market in India forecast to reach $14.4 billion by 2010, according to a recent ISA-Frost & Sullivan report, it's no wonder that startups are sprouting up all over.

Indian design organizations are moving beyond simple labor cost arbitrage to becoming true contributors to product innovation. In fact, in 2006 a number of marquee brands have invested in new design operations in India or significantly expanded existing facilities.

A common thread that connects technology majors such as Nortel, Cisco Systems, Lucent and Sun Microsystems is that they all use outsourced product development services. And their vendor of choice is Wipro Technologies, which is reckoned to be the largest independent R&D services provider in the world.

Will India become the EDA incubator?