India Concern to Design I.B.M. Chips
- From: ano457@xxxxxxxxx
- Date: 18 Nov 2005 12:38:28 -0800
India Concern to Design I.B.M. Chips
By SARITHA RAI
Published: November 18, 2005
BANGALORE, India, Nov. 17 - I.B.M. announced an agreement Thursday
establishing an Indian outsourcing company, HCL Technologies, as the
first design center outside I.B.M.'s own walls for its Power
Architecture chips.
The deal highlighted India's growing role in the design of high-end
chips. The country is better known as a hub for outsourcing of software
development and comparatively low-end back-office work.
The agreement is also in line with I.B.M.'s plan to adopt a more open
strategy in its microprocessor business by setting up design centers
around the world to help customers in areas like wireless technologies,
consumer devices and networking by developing customized chips.
At Power Architecture design centers, I.B.M.'s chips are tailored for
products as diverse as Xbox game consoles, high-definition TV's and
pacemakers.
Traditionally, microprocessors like I.B.M.'s Power chips were optimized
by shrinking the size of transistors and fitting more into each chip to
increase processing speed.
But with newer, tightly packed microprocessors consuming more and more
power, optimization in performance comes from adapting microprocessors
to different uses.
I.B.M. has its own Power Architecture design centers here in Bangalore,
and also in Israel, China, Japan, Switzerland and Germany besides the
United States.
I.B.M.'s agreement comes in the wake of estimates that India's
semiconductor design industry is growing, albeit from a small base. The
industry will triple by 2010, to about $1.72 billion from $624 million
currently, according to a recent forecast by iSuppli, a research firm
based in El Segundo, Calif.
"Outsourcing chip design to a low-cost center like India with a large
talent pool is a trend of the future," said Jagdish Rebello, iSuppli's
principal analyst for communication systems.
As with other types of outsourcing, the availability of skilled,
English-speaking workers at lower costs - design engineers in India are
typically paid a fourth of American salaries - is prompting chip
companies to expand in the country, aided by clearly drawn intellectual
property laws.
"The mind-set about what is possible and what is not in India is
changing and the country is becoming a development center for products,
software and chip design," said Sham Banerji, head of software
development for the Indian unit of Texas Instruments, one of the first
multinational companies to set up a captive design center in the
country.
HCL Technologies, India's fifth-largest technology services outsourcing
company, with $814 million in revenue, will pay a licensing fee to
I.B.M. for its use of the Power technology and will split revenue with
I.B.M. when the technology is sublicensed to others.
"I.B.M.'s goal is to make Power Architecture solutions as pervasive and
open as possible," said Ron Martino, I.B.M.'s director of Power
products.
The outsourced design center will be based in the southern Indian city
of Chennai, a site with 25 employees currently. But company executives
said this could grow into a 1,000-employee operation in two years,
depending on demand.
The center will offer equipment makers a range of Power Architecture
solutions, including sublicensing the Power group of embedded
microprocessor cores. Indian companies have progressed in the value
chain from doing back-end work to developing architecture, said S. R.
Dinesh, program manager in Asia for the electronics practice of the
Frost & Sullivan consulting firm.
India's own domestic demand for electronics and consumer electronics is
also growing rapidly.
The large number of companies setting up chip design centers
illustrates the maturing of the industry in India. Nearly 125 chip
design companies are now in India, mainly in Bangalore.
"Every major chip design multinational has set up operations in the
country," said Poornima Shenoy, president of the India Semiconductor
Association, a trade body representing semiconductor companies.
Ms. Shenoy said there was heightened activity, with semiconductor
companies hiring as many as 1,000 graduates in India annually. Chief
executives of international technology companies are routinely
visiting, she said, "and all this is an indicator that India has moved
to the next level."
The Indian development center of Intel, for example, has grown to 2,500
employees from 1,500 at the end of 2004. India is Intel's largest
design center outside the United States.
But India does not have manufacturing infrastructure, and experts see
this as a drawback to a larger role in the chip design process. The
nearest chip foundries are in China and Taiwan.
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