- 7/7/2025
Welcome to Escape Velocity by Outlook Business — a podcast series that dives deep into transformative trends, and the future of fast-growing industries.
Recently, Donald Trump pushed to bring manufacturing back to the US, urging companies like Apple to build iPhones within the country instead of outsourcing production in India.
This global push for in-sourcing is a powerful reminder that true technological leadership isn’t just about having the brands, it’s about controlling the manufacturing too.
In this candid conversation, Ashok Chandak, President, IESA and SEMI India, joins Deepsekhar Choudhury, Associate Editor, Outlook Business, and together they shed light on how this shift is playing out in the semiconductor industry.
While the US holds nearly 50% of the world’s semiconductor brands, much of the manufacturing still happens elsewhere.
For India, this presents an enormous opportunity and a responsibility to rise as a trusted manufacturing powerhouse for the world.
Mr. Ashok explains why semiconductors and electronics are not just another sectors but the backbone of economic growth: “One job in the semiconductor industry can create up to ten more jobs in other sectors”, he says.
Driving prosperity and innovation throughout the economy, it’s an engine for employment and self-reliance, and India is in a position to harness it.
However, with our reputation as a reliable manufacturing country and a growing commitment to building our own value chains, India is stepping forward to secure its place as one of the most dependable electronics and semiconductor manufacturing hubs globally.
Tune into the conversation that goes beyond just policy and technology and is about how India can shape its own economic future and emerge as a leader in the new world order.
Subscribe for more honest, forward-looking conversations with industry leaders who are defining India’s growth story, and share your thoughts in the comments below.
About Escape Velocity
What separates success from failure? Why do some ideas take flight while others never lift off? What is the true motto of a leader? Is failure the end of a dream or the beginning of a new journey? Get answers to these questions and more on Outlook Business’s all-new podcast - Escape Velocity.
A podcast that delves into the world of business and technology. This series will feature in-depth conversations with industry leaders, innovators, and disruptors who are shaping the future.
The name Escape Velocity reflects the journey of breakthrough ideas—those that overcome inertia, defy constraints and achieve transformative success. Through insightful discussions, the podcast will examine the forces driving technological advancements and business evolution in an era of rapid change.
What enables certain businesses to scale new heights while others struggle to gain momentum? How do industry pioneers navigate disruption and drive innovation?
Escape Velocity will seek to answer these questions,
Recently, Donald Trump pushed to bring manufacturing back to the US, urging companies like Apple to build iPhones within the country instead of outsourcing production in India.
This global push for in-sourcing is a powerful reminder that true technological leadership isn’t just about having the brands, it’s about controlling the manufacturing too.
In this candid conversation, Ashok Chandak, President, IESA and SEMI India, joins Deepsekhar Choudhury, Associate Editor, Outlook Business, and together they shed light on how this shift is playing out in the semiconductor industry.
While the US holds nearly 50% of the world’s semiconductor brands, much of the manufacturing still happens elsewhere.
For India, this presents an enormous opportunity and a responsibility to rise as a trusted manufacturing powerhouse for the world.
Mr. Ashok explains why semiconductors and electronics are not just another sectors but the backbone of economic growth: “One job in the semiconductor industry can create up to ten more jobs in other sectors”, he says.
Driving prosperity and innovation throughout the economy, it’s an engine for employment and self-reliance, and India is in a position to harness it.
However, with our reputation as a reliable manufacturing country and a growing commitment to building our own value chains, India is stepping forward to secure its place as one of the most dependable electronics and semiconductor manufacturing hubs globally.
Tune into the conversation that goes beyond just policy and technology and is about how India can shape its own economic future and emerge as a leader in the new world order.
Subscribe for more honest, forward-looking conversations with industry leaders who are defining India’s growth story, and share your thoughts in the comments below.
About Escape Velocity
What separates success from failure? Why do some ideas take flight while others never lift off? What is the true motto of a leader? Is failure the end of a dream or the beginning of a new journey? Get answers to these questions and more on Outlook Business’s all-new podcast - Escape Velocity.
A podcast that delves into the world of business and technology. This series will feature in-depth conversations with industry leaders, innovators, and disruptors who are shaping the future.
The name Escape Velocity reflects the journey of breakthrough ideas—those that overcome inertia, defy constraints and achieve transformative success. Through insightful discussions, the podcast will examine the forces driving technological advancements and business evolution in an era of rapid change.
What enables certain businesses to scale new heights while others struggle to gain momentum? How do industry pioneers navigate disruption and drive innovation?
Escape Velocity will seek to answer these questions,
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TechTranscript
00:00:00look at from electronics perspective there are some other strategic areas where the electronics
00:00:04manufacturing into the own country is very important then looking at even the example
00:00:09like a cctv and that's because of cctv the issue is coming up about the cyber security whether
00:00:13somebody is reportedly monitoring everything and they are controlling and they know what's happening
00:00:17so if you're your own manufacturing your own standards that means you are able to manage the
00:00:22cyber security related requirements as well typically what we have seen is one job in a
00:00:26semiconductor industry is creating 10 jobs in the other industries almost no significant phone
00:00:33manufacturing by apple in india to 15 to 20 million units being made actually uh it's a highly
00:00:39significant milestone so india need not replicate what china did three decades ago we should reinvent
00:00:46and relook and innovate for a different business model the brand related profits those are made
00:00:53would be retained in the country that's economic value which you create and you harness for high-end
00:00:58phones which we refer let's say s25 galaxy for example or iphone plus and all those surprisingly
00:01:03for the viewers the bill of material cost could be less than 25 percent and this is where the economic
00:01:08value gets defined hello and welcome to the escape velocity podcast by outlook business where we
00:01:27talk to the movers shakers thinkers and doers of the tech and startup ecosystem today we have with us mr
00:01:33ashok chandak the president of india electronics and semiconductor association hello ashok how are you hi
00:01:40thank you very much i am good so ashok today we want to talk about the electronics and semiconductor
00:01:46industry sure and the thing that makes me most curious is today all countries in the world
00:01:53are racing to insource the electronics and semiconductor ecosystem within their countries in a way every
00:02:01country wants to become atmanirbhar in electronics and semiconductors last year indonesia had banned the
00:02:08iphone 16 saying that it does not create enough value addition within the country in its manufacturing
00:02:17just a few weeks back donald trump threatened apple and told tim cook that he must not manufacture
00:02:25iphones in india but in the us so why is it that every country wants to bring this electronics and
00:02:32semiconductor ecosystem within their shores very valid point actually and that is the trend we see now
00:02:41over last few years where most of the global companies if you look back few decades ago
00:02:49uh there were focus on a technology development and the manufacturing was outsourced so that is where
00:02:59the countries such as malaysia initially followed by china vietnam then taiwan you know they came up
00:03:07as a manufacturing activity of the electronic goods and semiconductor goods while some of the global
00:03:14companies retained the ownership and the competence on the technology and ip creations over the period of
00:03:21time things are beginning to change and this is what you see as you narrated already that the several
00:03:29countries are now looking at ensuring so-called or i would call getting the manufacturing into their home
00:03:37or a backyard few things one is on which is most important it is realized now that the electronic
00:03:45semiconductor are a foundational technology so they enable everything the way human mankind and the world
00:03:53is moving now is highly dependent and influenced by these technologies of semiconductor and electronics
00:04:00and during covid era that was the first time when everybody realized that the supply chain was so complex
00:04:09and it really started to create some kind of a difficulties in addition to that there has been now
00:04:16geopolitical situations and some of the war like situations where again it's realized and increasing
00:04:23importance of the strategic nature of this technology is to be manufactured into the own country
00:04:29so that you have it when you need it but beyond that actually there are also several other reasons and
00:04:38particularly one of the reason is the economic factor the global electronic industry is already running
00:04:45trillions of dollars in terms of the market size and the semiconductor manufacturing is about 565 billion
00:04:52dollars last year it's huge and that is economic topic in terms of the industrial activity which is also then
00:05:02relates to the employment generation the iv development the prosperity of the country the import export trade balance
00:05:12all those things are related to this and this is where now the countries have started to realize that it is good to
00:05:18have these electronics and semiconductor manufacturing into own country so that you create those employment you
00:05:26create the economic value you retain the economic value and i will give you an example how it works
00:05:31in the most of the products those are made the margins are not in the manufacturing activity core manufacturing activity the value
00:05:42addition from manufacturing is limited so for example you refer the iphone today for example
00:05:48or let's say uh laptop so the order of bill of material or the component cost is one element the ipr design software branding is another big chunk of the value addition
00:06:00the manufacturing piece is very small so pure play manufacturing value addition is about 8 to 10 percent only
00:06:09that's too small but because of this other consideration what i have narrated it is important that the
00:06:17to some extent the manufacturing activity is retained in a particular country and now looking at countries like
00:06:25india or let's say u.s for example you took example of mr trump and i will bring the example of india i mean
00:06:33we have such a big demography and about 1.4 billion population in the country and the demand for electronics and
00:06:39seminars keeps increasing we cannot be dependent on the imports perpetually so india has a plan to do the
00:06:46manufacturing in india u.s they realize now 50 percent of the global semiconductor brands are u.s brands
00:06:53u.s companies be it nvidia be it intel or amd texas instrument and you keep counting but the manufacturing
00:07:02activity is limited so all these companies they do outsourcing they manufacture into other countries
00:07:08and ship so the realization is if this all manufacturing is in own country that adds to the economic value
00:07:14it adds to the self-sufficiency you have the parts whenever you need it in case of emergencies this
00:07:21enables everything be it automotive be it health care be the personal gadgets be it the computing
00:07:27systems be the ai data servers and everything these are all enabled by electronics and semiconductor
00:07:32so you need to retain the control point for not only the ip developments but also manufacturing
00:07:39footprint and that's what you see now that the world is looking at getting back as much as electronics
00:07:44manufacturing into their own country i want to understand this that you said that eight to ten
00:07:50percent is in manufacturing so you mean it's the assembling part yes absolutely absolutely can you
00:07:57help break down for our viewers let's say in a smartphone in the bill of materials you know the cost of
00:08:03making that phone what percentage is you know the components and what percentage is assembling and what
00:08:09percentage is the design and branding and everything so uh look at the classic case and now you have to
00:08:15look at two different ends of the phones because as you took a phone so one of the most premium phone
00:08:20today let's say samsung galaxy or apple iphone and the another end you have to look at the low cost
00:08:25phones which are sold let's say from indian uh currency perspective less than 10 000 smartphones 5g
00:08:31let's say 100 us dollar other thing two extreme things and why i took this example is because
00:08:38the bill of material percentage of the total phone selling price in the market differs now
00:08:45based on the brand names and other things so for low-end phones or normal banded phones including
00:08:51let's say examples of uh oppo vivo or oneplus or indian companies like lava or some other people
00:08:58the overall bill of material costs could be in the range of about 50 to 60 percent
00:09:03bill of material means all the components including pcbs the semiconductors and displays and other
00:09:09stuff plus you have the ips the softwares and other stuff then you have the branding cost and your profit
00:09:15that's how it works for high-end phones which we refer let's say s25 galaxy for example or iphone plus
00:09:22and all those there surprisingly for the viewers the bill of material cost could be less than 25 percent
00:09:30so the and this is where the economic value gets defined that you have the all the components
00:09:37everything is just less than 25 percent of the final retail price of the phone the rest of the stuff
00:09:43is the innovation related money and r d spend what company does they create the highly reliable and
00:09:50a very high performance product there is a good user interface and the brand name value so that's how
00:09:57how it goes actually and that would explain now uh that uh if somebody looks into the balance sheet
00:10:04and the profitability of the companies like iphone maker they generate billions and billions of dollars
00:10:12which is sitting into the cash somewhere actually this is the reason why you see the profit margins
00:10:17are very high for the brand name also i want to understand then that if it is if if the bill of materials
00:10:25is as low as 25 percent and then add another 10 percent for let's say assembling that it is a
00:10:33maybe 35 or 40 percent less than 35 for a high-end phones for a high-end phone which is the whole
00:10:39manufacturing component of it the us has all the big brands us already has 60 percent of the value
00:10:48of that phone it is still looking for the 35 percent the other 35 percent why see in that remaining 35
00:10:57percent also we have to realize now when you start to make a phone is example you have taken but any
00:11:03electronic products it has got hundreds of other components sitting on to the pcb we call a printed
00:11:10circuit board which has parts are sitting over there the moment you enable the manufacturing of a phone
00:11:17in a country or a laptop or a healthcare equipment or a car electronics board you are expecting that
00:11:24it creates not only the employment for manufacturing setting up the plants and machineries
00:11:29use of the electricity and water and anything whatever you require plus also enables the additional industry
00:11:38so while making phone now some countries were importing everything and india is another classic
00:11:46example when we started phone manufacturing just two three years ago we were importing 90 percent of
00:11:50the components now once the phone gets manufactured the local ecosystem flourishes so most of the
00:11:57components would finally get manufactured locally so that expands the industry it creates employment it
00:12:03generates taxes it generates money so these are the reasons actually and then you have a control and
00:12:07now you are taking example only phone but look at from electronics perspective there are some other
00:12:12strategic areas where the electronics manufacturing into the own country is very important be it
00:12:20a defense related topics the radar related topic the telephone infrastructure then looking at even the
00:12:26example like a cctv which is very simple example and everywhere it is used roads or houses and everywhere
00:12:33now if you are having and that's because of cctv the issue is coming up about the cyber security
00:12:39whether somebody is reportedly monitoring everything and they are controlling and they know what's happening
00:12:44so if you are your own manufacturing your own standards that means you are able to manage the
00:12:50cyber security related requirements as well then the automotive vehicles for example the healthcare related topics
00:12:58typically what we have seen is one job in a semiconductor industry is creating 10 jobs in the other
00:13:04industries so component ecosystem the logistic ecosystem the supply chain ecosystem the import export
00:13:11and various other things so where to look from that perspective actually that this is the big enabler
00:13:17for additional manufacturing footprint the financial activity as well as the jobs and a country like
00:13:26india it's very important in us also it is becoming important because at one point of time us was one
00:13:33of the major manufacturer of the goods while unemployment rate there has also gone up and in that country
00:13:38unemployment is a big question also on ulsterd recently recently there has been a report that apple's
00:13:46manufacturing in india of iphones the value addition the local value addition in it has risen from 8 to 10 percent
00:13:54to around 20 percent so i want to understand how significant is that sure and how much more can it
00:14:02grow no it's a very valid point and i would call uh it's a highly significant milestone uh now whether
00:14:09it's 20 or 18 or 22 doesn't matter much actually what is important here is from uh almost no significant
00:14:18phone manufacturing by apple in india by 2017 or 18 time frame compared to uh 15 to 20 billion units
00:14:27uh million units being made actually and on a value addition typically value addition means what value
00:14:34addition is basically the amount of local sourcing which is done the components the plastics materials
00:14:43mechanical screws pcbs whatever you know components electronics semiconductor display whatever is
00:14:48utilized which is a locally manufactured into that particular device and phone is the example you
00:14:54have taken actually and same thing can be related to other electronic products because it's just the
00:14:59representative purpose so this 20 or beyond is highly significant because this indicates multiple
00:15:06things now number one it indicates that india is rising to become a global manufacturing hub india is creating a
00:15:16trustworthiness to the global markets as well as the indian companies that we are highly reliable country
00:15:25in terms of the manufacturing excellence in terms of increasing the additional number of components
00:15:33opportunities for the country and um this has to go up surely uh today look at the same iphone what you are
00:15:43referring uh the reports indicates that in china the value addition has been to the extent of 55 to 60 percent
00:15:51which is significant actually so can india reach that may not be same level immediately but we are
00:16:00on the road map towards increasing the value addition now both industry and the government
00:16:07are playing very important part and a role into this value addition norms number one there's an increased
00:16:14focus on increasing the value addition in all electronics manufacturing so our body like semi india as well as
00:16:21india electronics and association has been talking about it almost a decade now what is the importance of
00:16:27value addition and how it could be done and it is progressing so we used to be like less than 10 percent
00:16:31value addition about five seven years ago we were about 18 percent on average value addition by last year
00:16:38and we have road map now along with the mighty ministry of electronics and it which is uh really
00:16:43helping out on this to reach about 35 40 percent value addition in five years time frame that's overall
00:16:49across the country by referring and multiple steps have been taken accordingly with regards to
00:16:55some of the schemes such as production link incentive the design link incentive the electronic component
00:17:02manufacturing ecosystem related portion plus the various state governments are also rising to the
00:17:09occasion and showing high degree of interest and support so you would see gujata has done incredible work
00:17:18in supporting the semiconductor ecosystem by incentives and policies uh the water electricity and infrastructure
00:17:26building everything karnataka has shown a very good support with regards to the innovation and the
00:17:33design piece so a lot of semiconductor electronic design are happening into the karnataka now
00:17:38look at tamilnadu the electronics manufacturing they have stepped up all the policy supports and the
00:17:45labor related topics actually so electronics manufacturing is a very high stage in tamilnadu and still growing
00:17:52other states are coming up so there is a policy in assam now madhya pradesh is talking about
00:17:58andhra pradesh under a new regime of mr naidu is making efforts maharasota has something already going
00:18:06so many states the why i want to bring example is many states are coming forward now putting up the
00:18:12policies incentives infrastructure in place fully knowing that there is a good need of these things
00:18:20to expand the industry last year india made about 150 billion dollar worth of electronic goods which is
00:18:27sizable currently we are working along with the pmo and also mighty as ambition i think our honorable prime
00:18:34minister uh mr modhi already have spelled out including the union minister mr vaishnam that we
00:18:41should look for about 500 billion dollar worth of semiconductor and electronics industry size we call
00:18:47esdm electronic system design and manufacturing market and we are trending that and if we are to reach
00:18:54that stage that means this value addition has to also grow up and there are various schemes those are
00:19:00going to help out actually on this the value addition will go certainly and a particular product what
00:19:06you refer i can indicate that today we are let's say if 20 percent it could grow in next two to three
00:19:11years 30 plus today they do let's say manufacturing or assembly activity some of the plastics mechanical
00:19:19screws also even a press speed something is going on very soon you would see the pcbs those will be made here
00:19:25then you are looking at the display assemblies uh display driver ics for example at sir and foxcon is
00:19:32setting up a plant in uttar pradesh to do this display driver ics that would get in source for
00:19:38manufacturing there are a lot of semiconductor osats ramping up they would assemble the products
00:19:44so slowly this is going up actually and my expectation is except maybe some of the leading edge node
00:19:52high-tech semiconductors those are using three nanometer for example from qualcomm or apple or
00:19:58memory components for example they may still get import but it's not too far
00:20:06that we are reaching about 40 50 percent kind of a value addition for electronics manufacturing in
00:20:10about five to seven years time and not only this product but the various other products so china's
00:20:16rapid growth in the electronics manufacturing sector has been a lot because of how the government has
00:20:25created this restrictive labor policies there where their freedoms are curbed they are not allowed to
00:20:31protest and that's why the big electronics manufacturers have found a great home in china
00:20:40do you think that model is replicable elsewhere in the world especially in democratic societies
00:20:46like india so i would say the all this business models and a way of working is also function of time
00:20:57whatever is relevant three decades ago may not be necessarily relevant today number two
00:21:03we should look at the what is the end goal and objective it's like a mathematics you could solve the
00:21:09puzzle by multiple formulas and reach the outcome so similar thing here as well there could be different
00:21:15ways of implementation and execution of the policies with the end game or the end goal of flourishing
00:21:24the manufacturing activity so india need not replicate what china did three decades ago then we are just
00:21:30following we should reinvent and relook and innovate for a different business model while achieving the similar
00:21:40objectives and that is what india is doing actually right now so um yes at one point of time india had a
00:21:49labor troubles we used to see labor unions and lockouts in many industries few decades ago but this
00:21:58has already gone down substantially not question of electronics but even other sectors things have changed
00:22:03recently something like that also happened in tamil nadu right with samsung where but these are just the um few
00:22:11cases those are coming up now which used to be a much frequent uh couple of decades ago in india or even a
00:22:19decade ago in multiple sectors not only electronics but multiple sectors and i you know we we have seen the
00:22:24issue when nokia used to make the manufacturing in uh chennai near chennai in tamil nadu on one point of time
00:22:32it was big uh set up there and suddenly started getting into troubles later on so now what we should
00:22:39look at is how we can use the our strand which is more of a democracy related topics actually to achieve
00:22:47the objectives and that's what india is looking at and for india the complication is also
00:22:52the center state equation the states were at one point of time looking at this is central government
00:23:00policy now no more some of the states are realizing that it's a center and state together working
00:23:09on a particular vertical in a sector is much more useful now and that is what is happening of
00:23:17there are some centrally defined policy initiatives the incentive mechanisms and there are state level
00:23:24infrastructure creation readiness and other policies that would complement to get implementation done
00:23:31finally everybody has realized it is at the state level where the activity would happen any state for
00:23:37that matter because you have to create a manufacturing facility you need a land and you need infrastructure
00:23:40you need logistics you need communication all those things are required at a state level so now india is
00:23:46working on this model which is working quite well actually because we have seen last few years
00:23:51both semiconductor electronics manufacturing footprint is growing uh with the center state uh combo working
00:23:59and there are uh multiple policy initiatives uh the our policy today framework is looking at a winning
00:24:04trial what i call winning trial um because for any electronics manufacturing there are few things
00:24:10required actually so one is now here there are government policy framework which is a semi-con india program
00:24:17that enables the semiconductor manufacturing in the country required for the electronics manufacturing
00:24:23number two electronic component manufacturing ecosystem because a lot of electronic components required
00:24:28register capacitor capacitor passives inductors pcbs display modules assemblies all those things there is a policy now
00:24:35which is there and third is about central and state related topics these are all helping together
00:24:41to stitch a very holistic approach of a competitive electronics manufacturing activity
00:24:48and we have seen that there are several ems companies uh those have grown lips and bounce
00:24:53in terms of the total manufacturing what they do
00:24:55uh example is a dixon technologies canes uh from south india then there is a sirma sgs
00:25:03and there are global companies also setting up their operations here like foxconn
00:25:08uh flextronics uh san mina sci jabil and others so all these things are really um contributing in a holistic way
00:25:18to enable a sustainable and a competitive manufacturing activity and this is where i am saying
00:25:25that we don't have to replicate uh the china model but we have to look at in a different way ourselves
00:25:30with the current requirement and a situation to enable uh this kind of stuff
00:25:37uh there is a talk about china plus one because also many global countries have realized that they
00:25:43cannot be dependent only on one country actually so i would say it is not question of china plus one
00:25:48india is playing a card today and working on a strategy which is not only our own
00:25:53consumption related manufacturing but also india for many so we are looking at multiple countries
00:26:02for exporting the manufactured products that uses economics of scale and india itself is a big
00:26:09consumption actually considering our population and need of electronics so there is a huge demand in
00:26:16india and which is something different from other asian countries be it vietnam be it thailand or
00:26:23malaysia or even singapore these are the countries those who are doing a lot of electronics manufacturing
00:26:28before they still continue to do to some extent but they don't have their local demand actually
00:26:34so this is what india is leveraging now that we consume for our india needs as well and in the process
00:26:40we also build the reliable supply chain and a quality manufacturing uh footprint which is utilized for
00:26:50global demand servicing another question i have is you just talked about the trio strategy of which
00:27:00one part is design now i want to understand if we talk about semiconductors the biggest semiconductor design
00:27:09company in the world today is nvidia it's the hottest stock in the market it's worth three trillion
00:27:15dollars and nvidia says that 80 percent of the chip design engineers are in india we have seen data
00:27:24that 20 to 25 percent of the world's chip designers are in india so we have indian chip designers designing
00:27:33all these advanced chips from india sitting in bangalore or pune and its country is like the us you know
00:27:42companies in the us or europe reaping the benefits why don't we have those kind of companies here in india
00:27:49yeah it's a very varied and very good question actually and
00:27:53uh that's really a curiosity for many people the point is we're to go back a few decades and some of these global companies what we're referring in the field of semiconductor now
00:28:07have not come up overnight they have been there for three decades four decades five decades
00:28:14some of the companies for example philips semiconductor which is an xp now was founded in 1951
00:28:20i look at the texas instrument or intel they were founded about four five decades ago so
00:28:28india policy the strategy and approach during 70s 80s was not related to this sector actually we did not invest
00:28:38we did not have right policies uh the indian corporates were busy in core sector uh textile
00:28:45uh automobile the uh metals manufacturing and other stuff this were there then when the next revolution
00:28:54came during 90s and 2000s actually uh india chose to deploy our talent because again led by many companies
00:29:07a path of least resistance in terms of the called as a services business
00:29:10business so we became the software developers it services the design services uh deploy the head
00:29:18count uh one lakh rupees salary you bill 1.2 lakhs 1.3 lakhs to the end customer and continue that's a business
00:29:25model became highly successful uh nothing wrong in that because at that point of time that was the situation and
00:29:32it has created a good base of the indian it software developers as well as the design ecosystem player
00:29:40so this is where we have achieved the good strength and supremacy but in the process what we missed out
00:29:46is a product creation so indian companies did not focus and did not spend much efforts on product
00:29:54creation and up creating a brands and it takes decades and decades so some of the example which we
00:30:01have taken for example apple or let's say dell or some of the automotive makers in
00:30:08germany for example like mercedes or bmw or general motors or healthcare providers like siemens or ge
00:30:16they focused on creating their own brand value and a product creations basically which india did not do
00:30:21indian companies did not do it takes time it needs a lot of investment and sorry to say this but even
00:30:29uh a decade ago five years ago most of the indian corporates any sector their investment in r&d was
00:30:37quite limited there were some government policies which were pushing and compelling them to put
00:30:42investment in r&d they were doing but the amount of investment which was blowed back
00:30:46from their manufacturing operations in r&d was quite limited and all this technology sectors high
00:30:53tech sector needs a humongous r&d activity most of the chip companies spend about 15 percent to 17
00:31:00percent of their manufacturing activity into r&d activity for a product creations and r&d so this is
00:31:06what we have missed out and this is now reflecting that we do not have those product companies or brands
00:31:12not only semiconductor but even i tell you electronic story i remember during my childhood
00:31:17days we had a lot of electronics brands so there was a videocon there was a onida there was a crown
00:31:24even the goodrich was doing a lot of activities and few more many indian brands disappeared now
00:31:31so today you go into the market and buy a color television whether it's a led television
00:31:36or whatever technology you call where are the indian names there was recently this viral social media
00:31:43post which said that the indian brands of the 80s or the 70s they were so good that they lasted so long
00:31:53that people did not want to buy you know another replacement yeah replacement there was no replacement
00:31:59and hence those companies died do you do you kind of think that no that is not the case no that's
00:32:06not the case the things have also changed actually yeah see i remember the first phone when i brought
00:32:111995 motola star track i used five seven years same thing you might have seen with your parents and
00:32:18senior people actually things have changed now technology is changing so fast and these all product
00:32:24categories are changing so fast that people are replacing them more frequently and you're right
00:32:30the crd tv which somebody has brought 21 inch or 29 inch was a bigger size let's say they kept it for
00:32:3610 years and it was working now the current televisions and other things also people can use it but in
00:32:43three to four years they will change because something better has come some better functionality and
00:32:47all those things so things are changing because of the technology movement there that's what is
00:32:52changing over there so coming to the original point this is where the difference has been
00:32:57now again there is a focus and this is what we also recommended multiple times to ministry of
00:33:03electronics i.t that india need to create a focus on product creation so india should become three
00:33:10things we are referring right now and that's a strategy and a vision which we are driving as an industry
00:33:14body uh india is a product nation india is a production nation so that's a manufacturing topic we are
00:33:21referring and india is a skilling bank skilled talented people and that we already have to large
00:33:29extent that we can still build on that the product creation is important and i go back to the first
00:33:34question you were asking in terms of the various companies and a value addition i have narrated and told
00:33:39you for the benefit of users and audience here that there is a tremendous value in the brand and ipr what
00:33:48you create and that is what when you own your own product and that is the economic value retained in
00:33:54any country so today if we are able to create a good brands for example you referred the case of apple just
00:34:02an example or samsung if we create similar brands in india the brand related profits those are made
00:34:10would be retained in the country that's economic value which you create and you harness so india need
00:34:17to get to that level and there are new schemes being launched by ministry of electronics and it for our
00:34:25segment and vertical called the design link incentive then the startup programs these are now being
00:34:33targeted to build india's own products so complete end-to-end definition design manufacturing and a
00:34:43productization and a branding this is what we are progressing now it may take decades before we reach
00:34:51that critical mass where some of the other countries particularly uh you referred example of the
00:34:55european as well as the american companies and again i can add into that the japanese companies for
00:35:00example they are very solid brands and it will take time for us but i think we're moving in that
00:35:05direction to create our own brands and our own product creation so this is where it has to go and that
00:35:11should be the focus going forward for the country when we talk about electronics manufacturing phones have
00:35:17become very big i mean apple is producing here samsung is producing here what i want to understand is
00:35:23today india also has other aspirations we have aspirations like making a fighter jet locally we also
00:35:31want to make the ev transition and have big companies like tesla produce here we want to grow our own
00:35:40domestic companies to be maybe as big as byd in china so to understand that the phone ecosystem that has
00:35:49developed today and the component manufacturers who are coming up so does this have an uh effect
00:35:59on the other adjacent systems ecosystems that want to come up that that we want to uh develop so is there
00:36:08an overlap or we are kind of talking about building everything from scratch when you are talking
00:36:14about building jets in india or building evs very good question actually and this is very pertinent also
00:36:24because many times it is seen that the products what you narrated and mentioned these are a different
00:36:30functionality they need a different expertise they do a different function these are different market
00:36:35segments so the question naturally comes whether we are going to create for that particular segment
00:36:41or product category everything from scratch and the answer is no uh there is a lot of reuse and i think
00:36:49it's like a kitchen uh i don't know whether you have walked in the kitchen or not
00:36:55or i remember now maybe first time i went to hotel was about 25 30 years ago and when i go and ask this guy he
00:37:04said sir i asked what is the menu he said sir i can get you aloo govi i can give you aloo matar i can
00:37:08give you aloo paneer i can give you aloo palak i can give it went on i was thinking do they have all
00:37:14these 15 vegetables cooked and ready i went inside to check it out actually and nothing was ready actually
00:37:21there so what they do is they have the basic ingredients available and depending on it you make a
00:37:26recipe and cook and give it same thing we do in the kitchen also today so are not exactly the same but our
00:37:33industry is in a similar levels it's a layered approach so there are some of the topics
00:37:40materials for example many materials are common for various industries then the some of the components
00:37:47let's say printed circuit boards the passive components the manufacturing setup is the same
00:37:53you produce a different rating so you may need for example for a phone uh the parts those are
00:38:00operating at 2.3 3.3 volts very very low power consumption you may need same thing when you go
00:38:08into the automotive or car electronics you said ev you may need some of the parts to operate at 12
00:38:13volts operating voltage or 24 volts operating voltage and you go into the defense related topics now
00:38:21you may need to operate them at a 48 volts or even 110 volts you go to the household appliances you have
00:38:28230 volt power supply so you know things are looking to be different but you will make this components
00:38:35manufacturing which is utilizable across multiple verticals and medical domains same is going to happen for
00:38:43for the semiconductors as well so you may have technologies which is let's say leading edge and
00:38:49a lagging edge node and both i will explain where you will have 90 or 120 nanometer manufacturing technology
00:38:56by the same plant you will able to produce the semiconductors or integrated circuits for let's say power
00:39:03management ic of a phone or some of the components which are required for automotive electronics
00:39:09or some components required for jet maybe for jet then same component you have to do radiation hardening
00:39:16or military grade packaging that's a last step but the basic design you could do the with a similar
00:39:22then the tools what you use are again common the eda tools which are required to design the chip
00:39:28semiconductors or the tools required to design the other electronic components are again common so there
00:39:35are various commonalities that does exist which you can rebuild the very classical example recently
00:39:42what i have seen is called the thermal management because when you design any electronic product
00:39:48as you are packing a lot of functionality inside and you are running a CPU at a very high speed be it
00:39:54a phone or a laptop for example CPUs are running at 2.7 or 3.3 or 5 gigahertz as a speed
00:40:00the faster they run they consume more power and it hits up so you have to do the thermal management
00:40:05so that it doesn't hit up and you would have seen some phones they will hit some phones don't hit up
00:40:09actually because they manage the thermal inside properly similar thing happens on the laptops
00:40:13so this thermal management learnings from such project products could also be applied into vehicle
00:40:24electric vehicle could be applied into the defense related infrastructure could be applied into the
00:40:31healthcare gadgets the industrial automations all iot's so there are several commonalities and that's why i said
00:40:38it's a layered approach obviously everything you cannot use as it is but you have to make some modification
00:40:46adaptations depending on the use case but the final answer and summary is it is not necessary to create
00:40:53everything from scratch an independent compartment for each product type no there will be reuse there will
00:41:00be platform approach and there will be some adaptation which will do at the last stage
00:41:04to fine-tune it for a respective application and that is a beauty and that is a strength
00:41:10what we have that you start building the ecosystem for semiconductor you can use it for variety of
00:41:15domains including the defense or let's say personal gadgets you build the electronic component ecosystem
00:41:21you can use for everything you build the material ecosystem for example now there is a critical
00:41:26materials or minerals is issue china has blocked and many countries are in trouble so we india is also
00:41:32looking into because we have a lot of rare materials we are not processed but so we start doing that and we can
00:41:38use it across multiple of segments it could work oh another uh thing is that you talked about how a lot of
00:41:45states in india today are looking to manufacture electronics and semiconductors everybody is attracting these
00:41:54companies with additional incentives on top of what the center has given now i want to understand when we are
00:42:04giving paying so much money to these companies to create these you know build these plants in india
00:42:12why shouldn't we get the most advanced technology let's say in semiconductors three nanometer today
00:42:19or maybe two nanometers that's the most advanced technology whereas we are paying today for technologies
00:42:26which are a few generations older so it's like i am paying a lot of money to get an older iphone or an
00:42:35older version an older version of a samsung phone which is five years or ten years uh old why is the
00:42:44government doing that can you also explain this leading edge and trailing edge difference again you
00:42:51see i would call a wrong optics actually from the audience and people perspective and it is also wrongly
00:43:00narrated in the public circle i'll give you an example so uh leading agent lagging age what you mentioned
00:43:08for electronics related stuff which in the semiconductors and for semiconductor manufacturing
00:43:14the commonly used word is what is the technology node at which you do it which is basically the
00:43:20thickness of any transistor design what you do on a silicon wafer and the smaller the geometry smaller
00:43:26the size you are able to pack more number of pieces so initially let's say during 1980s we used to
00:43:33pack about 100 000 transistor on a single chip which has gone now to the billions and billions
00:43:38of pieces because you make it smaller size smaller one and that's called as a leading edge or a
00:43:44latest technology of two nanometer three nanometer or below 10 nanometers let's say today leading edge
00:43:50rest of the stuff is called lagging edge initially when this semiconductor's development started
00:43:55it used to be 350 nanometer became 180 120 90 became 65 45 28 14 nits there now if you look at the total
00:44:05market size of semiconductors which was 500 and sorry 650 billion dollar now in the previous last year
00:44:1340 percent of that was on a lagging edge and 60 percent is a leading edge now by 2030 it is expected
00:44:22that the semiconductor market globally would exceed 1 trillion dollar by that time 70 percent would remain
00:44:31a leading edge 30 percent would be lagging edge that means there would be 300 billion dollar worth of
00:44:38semiconductor requirement in 2030 from the lagging edge technologies which we can call as a 28 45 90 and
00:44:45so forth and today it is in the similar percentage level i said about 40 percent so demand still exist see
00:44:53this leading edge technologies are not necessarily used for everything you will use leading edge predominantly where
00:45:00the data server ai servers the smartphones couple of components there mainly the main cpu is where you
00:45:11use that then the laptop computers use the microprocessors that cpus you call for example intel i12 i13 so
00:45:20very commonly used word or similarly from amd actually and memories so they are using the leading edge
00:45:28technologies so we should not be looking that we are paying for old generation technologies we are
00:45:33paying because demand still exists and these components are required for every other electronic products
00:45:41be it healthcare be it industrial automation is iot even in a smartphone and a laptop there are several
00:45:47components those are on a lagging edge technology actually for example the rf part the power management
00:45:54ics the power dissipation ics the power adapters for example what we use actually including some of
00:46:00the display drivers so these are still used 14 28 nanometer kind of a technology node but the demand
00:46:07for these will go on decreasing right like you said it's 40 percent now sure five years down the line
00:46:12it's 30 percent sure but what is the market size that time still 300 billion dollar yes yes it's not small
00:46:18today out of 650 the 40 percent is what still 250 billion dollar so market is not decreasing i'm coming
00:46:28to that lagging edge would be required but first thing we need to clear from the mind of the people
00:46:32that this lagging edge old technology we are wasting money no we're not wasting money it is still required
00:46:39it will continue to be required over decades and decades actually still more because there are several
00:46:45components which are done these are being manufactured at the technology node which is so called the
00:46:53lagging edge i mentioned 28 45 65 and all those particularly for most of the automotive components
00:47:00today except one or two components are on a lagging edge most of the industrial automation are on the
00:47:06lagging edge particularly or power management power devices actually are on a lagging edge so we are not
00:47:12wasting money these are required and this will continue to be required now should india invest and get
00:47:19the leading edge yes we should do that because from a futuristic perspective it is required but also we
00:47:24need to be aware that to set up those plants we are at a major disadvantage position first thing is we
00:47:32don't have our own companies having any process or a technology or a know-how to make those things in
00:47:37india so we are fully dependent on some of the global companies to come to india and set up those
00:47:43leading edge technology terms and they are not willing to transfer the technology because it is so
00:47:48specialized and it is held by handful of companies so they are not willing to transfer the technology
00:47:55know-how so easily for two or three nanometer in terms of the manufacturing process design is a different
00:48:01topic india is already there there are a lot of indian companies global guys including indian startups
00:48:07working onto the leading edge node for a design activity including design outsourcing but on a
00:48:12manufacturing is a different ball game and that is where we don't have process know-how and the global
00:48:17companies are definitely not willing to transfer the technology for a leading edge node as there are
00:48:23very few companies hold that iprs actually so we are at a disadvantage number two the manufacturing cost of
00:48:30setting up the foundry or fab for leading edge runs into huge cost it goes 8 billion 10 billion 15
00:48:38billion dollar for a single plant it's a big chunk of money in that money we can still utilize and target
00:48:47this existing technology which are still required for majority of the equipments and products and would be
00:48:54required several years in future so that's where you know india has position that whatever could be
00:49:02done when available funds those were made available as incentives and subsidies whatever projects came up
00:49:08the companies came forward they start to invest and look at now the situation we know that the big
00:49:16corporates like tata then the south india murugappa group through their company called cg power or canes
00:49:23technology now hcl joining hand with foxconn you know they are also getting into this manufacturing
00:49:29activity and they understand very well so they also have a desire and ambition to do leading edge but
00:49:36there are limitations actually we have to be aware so it will happen someday i'm not saying it won't happen
00:49:42but my only point here i'm going to if we are not done leading edge immediately we are done lagging
00:49:47edge nothing wrong i think strategically it is good actually i would i would support that it is good
00:49:53available funds were used for multiple things today there are almost six projects approved by central
00:49:58government for the funding there are another six project i am aware of where state governments are
00:50:03funding central government fund is not approved yet because of the limitation of the total corpus that was
00:50:09available but there are six projects approved by multiple state governments and they are giving the
00:50:13subsidies beat in orissa beat in gujarat beat in maharashtra beat in assam so it's already progressing
00:50:20so we should just judiciously use this available funding to get started somewhere because india has been
00:50:26far behind in the semiconductor manufacturing curve and that's what is progressing and as this progresses
00:50:33establishes its own our credibility in a competence and trustworthiness i'm sure there will be
00:50:39opportunities for a leading edge manufacturing in our future intel had a few years before started its
00:50:47restarted its own foundry business i think which it used to exist then the foundry business for some
00:50:53time was not there and they restarted it i think a few years back right yeah and now again they are thinking
00:51:00of kind of either hiving off or selling the uh foundry business and the reports around that were
00:51:07that they were not being able to achieve certain yields uh from their fabs so i want to understand
00:51:14this from you so when you make a chip fab is it not a sure shot thing that if you have put all the
00:51:22machines in the right places that it will be a successful plant does that mean that there is there
00:51:27a chance that when we are maybe giving subsidies for the fab and setting up the fab getting convincing
00:51:33global companies to come here and manufacture so even after doing all that is there a chance that
00:51:40a plant will not produce enough yield and what does that mean it is likely first thing is uh may
00:51:48not happen though i mean we should not paint a pessimistic scenario that we are landing into some
00:51:53landmine or trouble but it's possible and there is a mathematical probability yeah there is a
00:51:59probability actually there is a possibility uh and companies have to take care of multiple things
00:52:03so problem point is like this the semiconductor manufacturing has become a most complex
00:52:10manufacturing process anywhere in the world and many people don't realize but here the
00:52:16there are multiple elements those are important and instrumental so you need the silicon you need
00:52:24the materials you need specialty gases chemicals there are at least 80 chemicals and gases we have mapped
00:52:31out those you need to produce the semiconductor wafer and these are required at a purity level which is
00:52:37like 99.99999 so they call six nines or seven nines there now india does not have it today by the way
00:52:46so india has to still india has got i mean we think chemicals so india is a great industry it is there but
00:52:52they don't have the competency and capability to produce to that purity level including gases just an
00:52:59example this one so but the point i was carrying out is even for a semiconductor manufacturing there are
00:53:03several ingredients those are utilized and each stage of those materials raw materials and
00:53:16process and running the high degree of precision and a high degree of purity of those materials is
00:53:22very important anywhere little bit things going wrong can impact your final yield and a final outcome
00:53:30yield is what for example you make a wafer we call the eight inch circular wafer you produce let's say
00:53:35100 parts out of 100 parts how many would be properly working part as per functions desired that's what we
00:53:41called as a yield typically so in many companies those are really highly specialized they would read
00:53:46about 95 to 98 percent somebody has 80 percent and below particularly it becomes unviable because then
00:53:52you are wasting so if you yield is 80 percent for example that means out of 100 parts you are producing
00:53:5820 you have to throw they are not working to the desired function desired level and this is where
00:54:03for a newer technology innovations this becomes very critical because you are doing your own process you are
00:54:10developing your own technology and a manufacturing process for uh let's say somebody you want to do
00:54:15three or two or ten which intel was doing obviously some other companies so if you're all everything is
00:54:21not perfectly working you are not as you perfection it impacts the age today tsmc is a benchmark they are
00:54:28best in class from taiwan samsung is doing leading age memory companies for example micron or hynix they are doing
00:54:37now coming to the lagging age the advantage with lagging age i bring back now is these are a mature
00:54:42process nodes these are a mature process technologies which have been perfected over the years deployed
00:54:51over the years and they are working so when you set up the plants of these mature nodes you are also
00:54:57taking a technology transfer from somebody or somebody company is setting up their plants they are at a
00:55:02position of advantage that the there are very few uncertainties or variables that could go wrong
00:55:10because things are already being deployed perfected and implemented so that way having said this
00:55:16my view is there is a very limited chance something can always go wrong there is a limited chance that
00:55:24we will not achieve the desired yield or our plants those have been approved by
00:55:28uh central government mighty uh for tata or canes and cg power and micron other things something would
00:55:36go wrong there there's a very limited probability there it's rare uh i hope this works out for the
00:55:42reason i mentioned these are already perfected mature technology nodes and obviously uh one important
00:55:48thing remains there which impacts the execution is still there are many things which does not exist in india
00:55:54particularly some of the materials chemical gases i mentioned so we have made already a report
00:55:59actually as a isa and semi which are the material gases required we also started talking to these
00:56:06industry bodies and the industries as what are the component other things are required over here how to
00:56:12localize including some global companies are coming up now so there are several global chemical
00:56:18making companies are looking at setting up operations in india so this is how the ecosystem is going to
00:56:25evolve so there could be impact on a little bit timeline or execution um a rare possibility of
00:56:33something goes wrong and you don't get a right yield and manufacturing output but i'm pretty fairly
00:56:38confident that things would uh fall in place eventually so many states today are trying to bring this
00:56:45uh attract these electronics and semiconductor plants now we have seen in the last few years that there is
00:56:54this growing geopolitical uh fracture right you know you you don't know when another war will start
00:57:02anywhere taiwan today faces a threat from china a few uh i think a couple of uh weeks back uh israel took out
00:57:14some nuclear plants in iran now i want to understand is there a want of strategic thinking even in the
00:57:23electronics and semiconductor industry that's coming up in india should we be concerned about a lot of
00:57:29these plants coming up in border states that's in the northeast or on the western borders historically we
00:57:36have had all the industry uh industrial development in the south is that safer in terms of if there is
00:57:45a war or a conflict with another country is that something that the industry thinks about i would say
00:57:53that um we should not worry too much on that uh considering some of the wars which broke out recently
00:58:00also the warfare they have become very advanced and they are able to make the impact thousands and
00:58:06thousands of kilometers actually uh through air or through under the sea and whatever means it is
00:58:12uh with the missiles or drones and other stuff so if you are looking at a plant somewhere it could
00:58:19impact we should look at basically the overall ecosystem how you develop and create because typically
00:58:25manufacturing activity is different than the design activity a design activity you can spread across
00:58:31anywhere in the country and india's advantage you know it's a huge country huge population
00:58:35multiple states you what you need is the design tools and office setup and the manpower talented people
00:58:41and you are ready to go set up a design activity and that is what is happening
00:58:45so your design activity all across the country typically manufacturing is created in the clusters
00:58:49because for manufacturing activity you need multiple raw materials and components and other
00:58:56ecosystem so this ecosystem gets developed over period of time so my view is manufacturing wherever
00:59:02we do we need to look at more as a cluster approach or ecosystem approach today what is happening is
00:59:08particularly electronic semiconductor every state wants the semiconductor to be done into their backyard
00:59:14it's just like you ask the countries multiple countries are looking at how can i get the
00:59:18semiconductor manufacturing into my own country or electronics manufacturing into my own country
00:59:24similarly many states are looking at today uh inner s uh that it should be in my state actually
00:59:32considering the uh impact which i already explained uh previously uh economic activity job creation
00:59:39and all those things as a risk that you know if there is tomorrow war with pakistan no i don't see
00:59:44i don't see on the border they'll try to hit our economic manufacturing assets i don't see as a
00:59:49risk because even there are much bigger economic assets beyond that actually you took the example
00:59:53of gujarat so a semiconductor few fabs are coming there now gujarat has got a such a big industrial
00:59:59activity including the petroleum and various other stuff it is there if somebody has to hit you will
01:00:05in those things actually first before they hit the semiconductor manufacturing plant which is
01:00:10housed in a small place in a building because you don't need a big space compared to the other
01:00:16industrial things so i don't think that is the issue if the country is protecting
01:00:22through its defense mechanisms it will protect these plants as well and the good thing about
01:00:28india is and that's what is happening now there are multiple industrial clusters those are coming up
01:00:34so for electronics already there are seven to eight states those are already doing manufacturing
01:00:39activities and they will continue to expand so it's not located into single place same thing on a
01:00:43semiconductor site i think we are on the call so i cannot show you map but i can tell you that in
01:00:48addition to gujarat there are semiconductor plants approved in assam there is a plant approved in uttar
01:00:52pradesh there is a plant approved in mumbai a company called rrp there is a plant approved in
01:00:57surat by a textile manufacturer there are couple of plants approved in by state government by the way
01:01:02in one in chattisgarh one in odisha one in chattisgarh one in bangalore so it's already spread out
01:01:10actually and around those plants the rest of the ecosystem would come as a cluster what we are
01:01:14referring actually over here so i don't think we need to worry too much on the war related activity
01:01:21and position our electronics manufacturing at the center of india not necessary over there thank you so much
01:01:28ashop for your time it was a great conversation i wish you all the best to take the ecosystem and
01:01:34the industry ahead and hope to see you again soon on this podcast thank you very much it is a very
01:01:39nice conversation and this is a very sort of sector and today electronic semiconductor is like a
01:01:46bollywood movie everybody talks about so last year i have counted based on our survey
01:01:51the semiconductor word is used in media 20 000 times three years ago it was mentioned 1500 times
01:02:02so you look at the amount of interest and curiosity and a coverage it has generated and thanks to the
01:02:09media people like you as well those are really proliferating the importance of this sector and the
01:02:14technology so thank you very much for that look thank you so much ashok thank you
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