CyberMedia Research India VLSI Design Services Study 2012 reveals

• India VLSI design services industry accounts for over 14% of total India semiconductor market at US$ 1.25 billion in 2011
• 70 companies in India offer VLSI design services as ‘captive’ or ‘third-party’ service providers
• Overall India semiconductor industry stands at US$ 8.73 billion as of 2011, being served by 163,000 engineers with over 20,500 engaged in rendering VLSI designs
• Wipro Technologies, SmartPlay Technologies and Sasken Communications are the top three companies offering third-party VLSI design services in terms of revenues and engineering staff strength

Bangalore : The India VLSI Design Services industry is pegged at US$ 1.25 billion or 14% of the overall India Semiconductor industry in 2011, with captive design centres accounting for close to 70% of total revenues. In terms of number of companies, the India VLSI design services industry comprises approximately 70 firms designing chips for various customers within the large volume segments of Consumer Electronics, Networking and Telecoms, besides niche areas like Healthcare.

These findings were revealed in the CyberMedia Research India VLSI Design Services Study 2012 (March 2012), published today by CyberMedia Research (CMR), a Technology, Entrepreneurship, Healthcare, Utilities and User intelligence firm.

Figure 1 below, shows the proportion of number of chips designed for different industry verticals in the year 2011 by Indian VLSI Design Services firms.

Chip designing in general and VLSI in particular is not a new phenomenon for the India semiconductor industry,” said Anirban Banerjee, Associate Vice President, Research and Advisory Services, CyberMedia Research.

“Indian design engineers, whether serving in captive or third party design companies, have exhibited depth of experience and a range of skills by taping out some of the world’s best chips that are used in several devices and gadgets we use in our daily lives,” Anirban further added.

“It is not surprising to see that Indian design firms are serving all the major industry verticals,” Anirban opined.

Third-party design centres have gained in importance equal to that of captive design centres of large multinational chip companies. Not only have these third party firms scaled in size and volume, they have also been able to acquire and harness the varied resources that are critical for serving clients having a wide plethora of requirements.

According to Faisal Kawoosa, Senior Manager, Research & Consulting, Semiconductor & Electronics Practice, CyberMedia Research, “The fluidity, skills refresh rate and very high quality of the product output has ensured continuous streams of revenues and clients for India’s third party VLSI design services firms. Companies offering these specialized services have not only kept pace with the latest technologies and tools used in the chip industry, but also matched the fast changing requirements of the end markets they serve.”

The India third-party VLSI design services industry revenues were estimated at US$ 375 million in 2011. Wipro Technologies led the industry with over 22% share while SmartPlay Technologies and Sasken Communications comprised the other companies that made it to the top 3 in terms of revenues earned. Collectively the top 3 companies constituted 30.1% of total India third party VLSI design services revenues for 2011, as shown in Figure 2 below.

Pointed out Rajat Kharbanda, Analyst, Research & Consulting, Semiconductor & Electronics Practice, CyberMedia Research, “The third party or non-captive design services industry is increasingly gaining momentum within the gamut of services offered by the India semiconductor sector. The diverse expertise available in the country has expanded and branched out of traditional areas such as IT and software services. In fact, it is a testimony to the depth of talent available within the country that Indian companies have been able to service complex chip architecture and design requirements in multiple industry verticals.”

Rajat further added, “Interestingly, apart from Wipro Technologies, no mainstream IT services company was able to figure at the top level within the VLSI Design Services industry. Relatively young companies like SmartPlay Technologies were not only able to enter the market but also scale up in a very short span.”

The India semiconductor sector employs over 163,000 engineers of which an estimated 20,580 serving the VLSI Design Services industry directly. Cumulatively, these 20,000+ engineers worked on a total of 4,150 projects in 2011, from clients spread across North America, Europe, Asia and other parts of the world. North America based clients constituted 64.5% of the projects for the VLSI Design Services companies in India during 2011.

On the technology front, Indian companies have designed chips on a 28 nm scale that have already been successfully taped out. In 2012, it is expected that 22 nm scale chips designed in India will also be taped out to hit markets across the world. Further, it is expected that Indian companies will graduate to 3D chip designing in the forthcoming quarters. By 2013, CyberMedia Research expects the overall number of VLSI Design Services companies in India to surpass 100. This fast increase in the number of design companies would be propelled by factors like increased availability of venture capital funding, success stories of the present crop of companies and the rising entrepreneurial instincts of engineers serving the industry for the past 15 years.