Moving up the IT value chain, India has been emerging as a major centre for chip design in recent years.
However, while European and US companies have already established chip design centres in the country, the Japanese were conspicuous by their absence. Now, it seems even they are slowly trooping in.
Japanese firms such as Sony, Matsushita Electric, Sharp, Fujitsu, Rohm, Toshiba and Sanyo have already set up their software development centres in the country.
And more recently they have been joined by chip design firms like Kawasaki Microelectronics (K-Micro) and SoCrates Software. Renesas Technology too will be possibly setting up base in India soon.
A chip or microprocessor is essentially a piece of hardware, silicon wafer, with embedded software and etched circuits.
Electronic hardware design involves designing chips with the help of automated design tools and is seen as the soft part of hardware development.
"In the past 6-7 months Japanese semiconductor design companies seem to have developed an interest in setting up development centres in India. Their decisions are based on analysis and structured understanding of the market," India Semiconductor Association (ISA) president Poornima Shenoy said.
With European and US companies having established captive or outsourced design centres in India, it appears the Japanese firms do not want to lag behind in tapping the talent of Indian IT experts for their chip design work.
"The recent attention of Japan towards India is owing to a lot of reasons including a revival of Japan's economy, recognition of India's ability to innovate and value add through designs, as well as India itself being seen as a growth market through affordability of the middle class for the latest gadgets," says Janakiraman, president and CEO, MindTree R&D services.
K-Micro, a leader in high-end application specific integrated circuits, with extensive advanced IPs, design and development competence, has set up shop in Bangalore.
Its innovative core technologies and design support are used in consumer electronics, computer, office-automation, networking, wireless, and electronic-storage products.
"Finally, we are here. We are just commencing our operations in Bangalore. Recruitment of technical staff is on. We are hoping for a good outcome," Atsushi Takagi, operations head, K- Micro India, said.
The ISA-Frost & Sullivan report on the Indian semiconductor industry estimates chip designs executed in India going up at a compounded annual rate of 13 per cent over the next ten years, from 320 in 2005 to 1,075 in 2015.
Total revenue from chip designing done in India is estimated to go up to $43 billion by 2015 from $3.2 billion in 2005.
Recently a delegation of the Japan Electronics & Information Technology Industries Association, comprising representatives of top semiconductor firms, was in India to explore business options."Among the companies starting operations in India, leadership often comes from US and Japan, with local hiring thereafter. The developing Indian consumer electronics market will also be of interest in the coming years," Shenoy said.