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Indian semicon industry attracts Intel Capital

Posted: 29 May 2006     Print Version  Bookmark and Share

Keywords:Krishnan Sivaramakrishnan  engineering  design service  Intel Capital 

Intel Capital India's Kumar Shiralagi
Shiralagi: In the Indian semiconductor industry, there are opportunities in design centric activity as well as services in design and engineering work for the semiconductor vertical.

The dynamics of the global semiconductor market are changing, with a steady growth in flow of semiconductor design work into India. With the high availability of semiconductor design engineering talent in India, local design services companies are experiencing high growth in business. In fact, Intel Capital India views the local semiconductor industry attractive from an investment perspective.

"We see a lot of activity in the IC design services vertical, both in terms of the business proposition that exists there, and the fact that companies in that space are looking for investments," said Kumar Shiralagi, Director, Intel Capital India. "In our view, in the Indian semiconductor industry, there are opportunities in design centric activity as well as services in design and engineering work for the semiconductor vertical."

>From a strategic standpoint, Intel Capital India is interested in supporting the overall growth of India's semiconductor industry. It is particularly interested in companies that orient design activity, specifically towards development of semiconductor products.

"An example of this is Sasken Communications, which has been part of Intel Capital India's portfolio for a few years now. The company has design services as a significant component of its business, and its work continues to contribute to the development of the semiconductor industry. Another example is MobiApps, in which we recently invested. This company is developing a product that leverages its design strength," said Shiralagi.

Intel Capital in India
Intel Capital India's broad areas of interest in end markets for semiconductor products are computing and communications. According to Shiralagi, their interest in the communications segment is in the entire ecosystem, including software and semiconductors, to applications for handsets and backend infrastructure, particularly in emerging WiMax and 3G areas. "In computing, it is in all chipsets. For instance, chipsets for areas like intensive graphics and security, and also in software solutions. We will develop some of these products in-house, and for some we will invest in and partner with other companies," Shiralagi explained.

An important factor that guides Intel Capital India's decision to invest into a company is how well the company is aligned with Intel's strategic interests. Companies that share a commonality with Intel in terms of markets addressed, and have capability sets that complement those of Intel's are frontline choices.

"A fabless design company that is focused on the computing or communications field, or is developing ASICs or products that support the overall growth of these fields, will strongly qualify for investment," shared Shiralagi. "Intel is becoming a strong player in the communications field. So, if we are making a processor for a handheld communications device, and there are other companies that make chipsets that will work with the processor, we would be interested in investing in those companies."

A case in point is the announcement earlier this year of Intel Capital India's decision to make an equity investment in HelloSoft Inc. as part of the company's second round of funding. HelloSoft provides high-performance communications IPs for OEMs in the converged communications market segment, spanning areas such as next generation VoIP, WLAN and mobile devices. Intel's strategic interest stems from it being a key player in the converged communications market segment. Intel and HelloSoft will now collaborate on integrated products and go-to-market strategies involving the Intel XScale processor platforms.

Ecosystem for semicon product development
Another significant consideration is whether the investment would contribute to the creation of an ecosystem for the development of semiconductor product platforms. "Intel is in the process of becoming a platform company. We design a number of key components such as processors and chipsets that go into our own products. However, we also look to partner with other companies, who have capability to design and develop some of the other significant components, such as embedded systems and software," Shiralagi explained.

"We may make the core components for a Centrino laptop platform, but you need Wi-Fi hotspots, security software and manageability software," he illustrated. "The ecosystem gets built around a host of complementary areas. We would invest in these kinds of companies as well."

"At the end of the day, we may have developed a platform, but we would have also developed the ecosystem to support the development of the platform," Shiralagi added.

Intel Capital India would also invest in companies that are involved with the general development of the IT market, which also includes education. "We invested in NIIT earlier in 2005. NIIT's charter is to go to schools, establish computing networks, provide content and train teachers. We would invest in a company like NIIT because that is good for the overall growth of the IT industry," said Shiralagi.

- Krishnan Sivaramakrishnan
  EE Times India

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