BANGALORE, India With about 125 captive and non-captive integrated circuit, board, and embedded design companies in India at present, a wave of mergers and acquisitions is being predicted by Indian semiconductor executives.
Indian design companies work in analog design, ASIC/FPGA design, system design, and IP creation, and according to the Indian Semiconductor Association (ISA) generated design revenues of $583 million in 2005, while other hardware and board designs generated $14 million and embedded software writing generated $2.5 billion in revenues. In all, this amounted to $3.20 billion, a number that is set to grow.
“The single biggest challenge for small Indian design companies those with up to 50 engineers is sales and marketing,” said A.G. Karunakaran, president of electronic design services provider, GDA Technologies Inc. (San Jose, Calif.) GDA, which has three development centers in India, is scouting for small design firms here to partner with. “We can be a sales and marketing channel for small design companies that have their own IP and we are exploring such partnerships,” Karunakaran added.
“I expect to see mergers and acquisitions. Most firms are in the $1 million to $2 million range (of revenues) and will remain small working on an opportunistic and bootstrapping basis. Today, there are just half-a-dozen true specification-to-silicon kind of design firms in the country,” said Tapan Joshi, vice president of marketing at eInfochips Ltd., co-headquartered in Santa Clara, Calif., and Ahmedabad, India. That company, which provides ASIC and embedded systems design and application software, is looking for acquisitions in the mixed-signal and back-end space and considered two acquisitions in India last year.
The 19-year old D’Gipro Systems Pvt. Ltd., Bangalore, is one of India’s oldest PCB and VLSI design houses. With revenues of $1.5 million in its 2004-05 financial year, it too is looking for a merger or an acquisition. “Only a merger or acquisition will help us capitalize on the increasing design business opportunities,” said S. Ramachandran, its president and chief executive officer.
“As the industry matures, I see a lot of consolidation happening,” said GDA’s Karunakaran. This has already started to happen, with the Pune-based Persistent Systems Pvt. Ltd. buying the Goa-based Controlnet India Pvt. Ltd. last year, in a landmark deal for the Indian design industry.
Despite a wave of consolidation the overall number of design output from India is expected to rise sharply due to India’s cost advantages compared with some other parts of the world.
The recent acquisition of another Pune-based firm, Pace Soft Silicon Pvt. Ltd., by Nvidia Corp. (Santa Clara, Calif.) shows overseas firms are also looking at picking up design firms in India.