One of the world’s largest semiconductor companies with a net revenue of US$ 9.73 billion in 2011, STMicroelectronics offers a wide range of products, and serves customers across the spectrum of sense and power technologies and multimedia convergence applications.
In a chat with Srabani Sen of Electronics Bazaar, Vivek Sharma, regional vice president, Greater China and South Asia Region, India operations director, India Design Centers, STMicroelectronics, talks about the company’s strategy in India and the potential markets it plans to tap.
EB: What are the potential market segments for ST in India?
Currently, in India we have a strong presence in the wireless mobile handsets segment. With about 800 million subscribers in India, this market is huge, and with many companies setting up base in India to manufacture handsets, this market will definitely grow. Another market related to this is telecom infrastructure. With 2G and 3G coming up, there would be a need for telecom infrastructure to push the handset market.
ST is also largely present in the consumer sector, where we are the world leaders in set top boxes, including in India. This market has tremendous growth potential. Coming to automotive, even though India is a hub of small and mid-sized vehicles, electronics is penetrating into this sector steadily. Worldwide, it is said that if the price of a car is US$ 10,000, then semiconductor content of around US$ 300 goes into it. In India, because of the large number of small cars, this is not true yet, but even in small cars, we wish to control the engine for fuel efficiency. Even in the case of two wheelers in India, there is a need for electronic applications in dashboards, flashers and also for engine control. Safety features can also be added on two wheelers.
I believe that when the cost of this technology comes down, it will be produced in large volumes as it is sure to become another very useful application. These are going to be strong growth drivers for electronics and semiconductors, which are related to each other.
The healthcare segment is quite nascent in India, but we are very excited about it. It is driven by the three aspects of affordability, accessibility and awareness, which are essential for preventive healthcare, and where India lags behind. This means that there is great potential here too. There are great applications like telemedicine, which can help Indian healthcare to reach the next level.
EB: Where does India stand in technological development compared to other Asian countries?
Some Asian countries are very advanced, and when we compare India with other developing nations, I think it still needs to progress a lot. As far as technology is concerned, it exists in India; it’s not that we need to do a lot of R&D to develop a new technology. For example, micro-electrical-mechanical systems (MEMS) can detect the DNA of diseases like malaria, dengue, H1N1, etc, much faster. So, you see, technology exists in India, but the key challenge India faces is to find applications for these new technologies. Industry needs to create awareness about these technologies, and the government needs to come up with the right kind of policies. Therefore, I don’t think that there is any dearth of technology in India; we just need to apply it and put it on the accelerated development path.
EB: With the National Manufacturing Policy rolled out, do you see semiconductor manufacturing picking up?
IT entered India successfully and the main advantage with IT was that it didn’t need much physical infrastructure. But that is not true for electronics per se because there is the physical movement of goods here. This means that we need to have a very congenial environment where even electronics can flourish. One of the issues in electronics manufacturing is the sourcing of components. The National Manufacturing Policy has a proposal to set up clusters for which support from the government would be of great help. Another aspect is to focus on R&D, which India will need to do more of in the future, because cost sensitivity in India will be higher than other developing countries. It would be really nice on the part of the government to provide funds for R&D to develop solutions for India. If we look at it from the tariff point of view, sometimes it so happens that importing a component proves cheaper than manufacturing it in India. That is when we need to be very careful. We should find out what the bottlenecks are, for manufacturing in India and resolve them first.
EB: What are the new products you are coming up with for the Indian market?
We have a diverse range of products catering to the needs of various sectors. Our range of set top boxes can be integrated with TV sets. We are also present in computer peripherals, particularly for printer applications. We have quite a strong leadership position in power components as well as MCUs. We are moving strongly in power applications including solutions for solar and wind energy. Now, we have a joint venture with Ericsson, through which we are present even in the wireless sector. With these different fields converging, we will have an edge as we are present in various sectors.
India is one market where all these applications are in demand. So we need not develop anything specific for the Indian market. When the local market grows further in the future, we may need to develop something very specifically for the Indian market.
EB: Do you feel the need to customise your products for the Indian market?
As far as the need for certain specific applications is concerned, that can be met very well with our present range of products. Semiconductors, too, may not need any customisation. From the electronics application point of view, our semiconductor products are fairly powerful. For example, our new series of microcontrollers—the STM 32—can cover a wide variety of applications. These MCUs are general purpose and can be used for a variety of applications. But there are other fields like consumer electronics and set top boxes, where we may need to customise.
EB: How is ST positioned viz-a-viz other semiconductor companies in India?
We have been present in this country since the last two-and-a-half decades. We started to invest in India since 1987. We now have a strength of 2200 engineers including our joint venture with Ericsson, and we figure among the top three captive centres for multinational companies in India. In terms of local sales, thanks to our investments since the beginning, we are amongst the top semiconductor suppliers in India as well.
EB: What edge do you have over your rival companies?
India is a diverse country. Its needs are not going to be confined to only one segment—it will consume everything from tablets to mobile phones. One unique advantage we have is that we are present in all these sectors in which some of our competitors may not be. We are also present in the analogue and power solutions sectors, which is a significant market in India. We also have a very strong presence in LED lighting, apart from set top boxes.
EB: Do you mean to say that you have an edge over other companies technologically, too?
I can’t compare ST with any company in particular. But I would say that we invest a lot in R&D. Our worldwide investment in R&D is about 20 per cent of our revenue. We have some technologies that differentiate us and give us an edge over others.
EB: How are you promoting your brand?
With our existing customers, we have a one-to-one engagement. We bring in all the latest technologies and solutions, and work with them to develop solutions for their requirements. Also, we participate in exhibitions and showcase our new technologies to excite our potential customers as well. We do not relax just because we have a good customer base; we need to be hungry all the time to win more customers.
EB: With the efforts to start manufacturing semiconductors locally, do you see any investors stepping forward?
As I mentioned earlier, the local market today is relatively small. A high end fab is supposed to manufacture high volumes, for which we currently may not have the demand. Therefore, from the market point of view, as of today, probably it will not make any economic sense to potential investors. However, it is possible that in the next five to ten years, there will be some investors.
