India's modernization plans could offer hope for chip sales

BANGALORE, India — Industry executives at the India Semiconductor Association conference here made the case that infrastrucuture modernization efforts could boost sagging chip sales.

The rise in purchases of computers, consumer electronics and mobile phones have indeed boosted chip sales in India. With the global economic slowdown spreading, executives here said they are hoping Indian infrastucture initiatives will jumpstart chip sales and help achieve sustained growth.

Nandan Nilekani, co-founder and co-chairman of Infosys Technologies Ltd., said technology is needed to deliver better healthcare, renewable energy, a better educational system while eradicating widespread poverty in India.

For example, smart cards could help deliver many new chip-based services to India's large population, Nilekani said.

Debesh Das, IT minister of West Bengal state, said technology is more likely to be spread using wireless phone technology that has penetrated much of the Indian market. Internet connectivity here continues to lag behind other regions.

Improved healthcare services are also expected to drive new semiconductor sales in India and elsewhere, said Ashish Shah, general manager of GE Healthcare India. GE has developed a new, low-cost, ruggedized electrocardiogram machine that costs about $750, meaning that EKG readings can be generated for a dollar each. "India has tons of opportunities for [semiconductor] companies," Shah said, adding that the company is working on other standard healthcare products.

Ajay Vasudeva, head of Nokia's R&D operations in India, said the company is conducting pilots projects focusing on teaching English through local languages while developing simple handset applications that can be used by farmers.

Solar photovoltaics and LEDs are also expected to create opportunities for chip makers here, and some executives suggested the downturn could be used to focus more on innovation and creating new products for these markets. They noted that earlier slowdowns created new market segments and could again in cities like Bangalore, which host engineering talent, venture capitalists, high-tech companies and schools.

In 2008, the value of the Indian semiconductor market is estimated to have reached $5.9 billion, according to market researcher Frost & Sullivan. The total was higher than expected due to strong sales of WiMax and other wireless equipment. An F&S market study forecasts that total semiconductors sales in India will reach $7.59 billion in 2010.