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India Gains in Role of Designing Chips (Remember, R&D won't leave, right?)
Red Orbit ^ | 20 November 2005 | Saritha Rai

Posted on 11/21/2005 11:09:44 PM PST by jb6

IBM has announced an agreement establishing an Indian outsourcing company, HCL Technologies, as the first design center outside IBM's own walls for its Power Architecture chips.

The deal highlights 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, announced Thursday, is also in line with IBM'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, IBM's chips are tailored for use in products as diverse as Xbox game consoles, high- definition TVs and pacemakers.

Traditionally, microprocessors like IBM's Power chips were improved by steadily shrinking the size of transistors and fitting more into each silicon chip to increase processing speed.

But with newer, tightly packed microprocessors consuming more and more power, enhanced performance comes from adapting microprocessors to different uses.

IBM has its own Power Architecture design centers here in Bangalore, as well as in Israel, China, Japan, Switzerland and Germany besides the United States.

IBM'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, California.

"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 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, one of the largest technology services outsourcing companies in India, with $814 million in revenue, will pay a licensing fee to IBM for its use of the Power technology and will split revenue with IBM when the technology is sublicensed to others.

"IBM's goal is to make Power Architecture solutions as pervasive and open as possible," said Ron Martino, IBM's director of Power products. "This strategy applies not only to our architecture, but extends to our ecosystem of alliance associates and our routes to market."

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 moved from doing back-end work to developing architecture, said S.R. Dinesh, program manager in Asia for the electronics and semiconductors practice of the Frost & Sullivan consulting firm.

Domestic demand for electronics and consumer electronics in India 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 in India.

Source: International Herald Tribune


TOPICS: Foreign Affairs
KEYWORDS: business; chips; ibm; india; outsourcing; rd

1 posted on 11/21/2005 11:09:45 PM PST by jb6
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To: jb6

I guess this is what happens when you have a nation of college grads with liberal arts degrees vs a nation that is churning out math, science and engineering graduates.


2 posted on 11/21/2005 11:19:32 PM PST by xrp (Conservative votes are to Republicans what 90% of black votes are to Democrats (taken for granted))
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To: xrp

No kidding. I say good for India. Their kids can beat up our kids, and they're playing by the rules.


3 posted on 11/21/2005 11:23:00 PM PST by Gordongekko909 (I know. Let's cut his WHOLE BODY off.)
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To: xrp

You act as if this is new.

The Dothan Pentium M that my laptop is currently running on was designed in Israel. Its successor cores, Yonah and Merom, are also Israeli.


4 posted on 11/21/2005 11:44:24 PM PST by Terpfen (Libby should hire Phoenix Wright.)
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To: xrp

You're being generous when you describe women's studies, black studies, and queer studies (yes, this really exists) as "liberal arts degrees."


5 posted on 11/22/2005 2:28:02 AM PST by Pete98 (After his defeat by the Son of God, Satan changed his name to Allah and started over.)
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To: xrp

Couldn't agree more.
It's ridiculous that a degree can come from "middleeast study", "African american study", "oriental language study". I mean who (other than McDonald's) is gonna employ these degree holders?


6 posted on 11/22/2005 3:30:09 AM PST by ConservativeChinese (I'm a Chinese, no affirmative action needed, thank you.)
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Comment #7 Removed by Moderator

To: jb6

If they design a better chip, I welcome their efforts.


8 posted on 11/22/2005 1:11:56 PM PST by dead (I've got my eye out for Mullah Omar.)
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To: Gordongekko909
No kidding. I say good for India. Their kids can beat up our kids, and they're playing by the rules.

I agree, to each according to their effort and ability.

9 posted on 11/22/2005 1:16:10 PM PST by oldbrowser (The U.S. Senate is a quagmire.)
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To: jb6

The Fabian Socialists continue to gain ground through the dumbing down of our educational system.


10 posted on 11/22/2005 1:19:56 PM PST by Amish with an attitude (An armed society is a polite society)
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