Ramya Mohan, the Vice President and Head of Group Strategy at Cyient, speaks on the company’s roadmap for its semiconductor business. The company with significant expertise in the semiconductor business is going to carve out a subsidiary to expand the semiconductor business. Ramya speaks about the size of the opportunity and why the company has decided to set up a subsidiary for the business. Edited excerpts.
Can you give me an overview of the semiconductor industry and how Cyient sees its story fitting into it?
The semiconductor industry is globally a $600 billion industry, and it is expected to grow to more than $1 trillion by 2030. This growth, at a rate of almost 12-13%, presents significant potential.
What are the opportunity areas within the semiconductor value chain?
The semiconductor value chain encompasses IP providers, design providers, and various other players. While the general-purpose chip market exists, the Application-Specific Integrated Circuit (ASIC) market is growing three times faster. This growth is driven by companies seeking differentiation at the chip level. Larger semiconductor players may not be as interested in this market due to its relatively smaller scale.
What is the addressable market in the ASIC space?
According to a study, the global ASIC market size stands at $24.6 billion in 2023. This is likely to cross the $52-billion mark by 2031, growing at a CAGR of 10 p.c..
Can you throw light on Cyient’s journey in the semiconductor industry?
Cyient has been involved in semiconductor design services for over 20 years. In 2017, Cyient acquired AnSem, a company based in Belgium with strong capabilities in ASICs. Over the past 7-8 years, Cyient has developed approximately 40 different ASICs. Cyient offers a turnkey ASIC solution, handling everything from customer specifications to final chip delivery. Despite the growing demand in the ASIC market, Cyient’s current business structure limited its growth potential. The capital requirements, buying cycles, and commercial models differed significantly between the traditional semiconductor services market and the ASIC turnkey market.
Why is Cyient carving out its ASIC turnkey business into a separate entity?
Cyient aims to carve out this business into a separate entity to capitalise on the market’s rapid growth. There are several reasons for this decision. Cyient has a strong track record in chip design and delivery, with a portfolio of over 40 ASICs. The target market for ASIC turnkey solutions aligns with Cyient’s existing customer base in the automotive, healthcare, communications, and industrial sectors.
Cyient can leverage its cutting-edge technologies and IP portfolio in Europe, combined with its cost-effective design engineering ecosystem in India, to offer a competitive proposition.
What is the current status of this new entity?
The board has approved the creation of the new entity. Internal preparations are underway, and the launch is planned for the first quarter of the next fiscal year. The new entity will operate as a fully owned subsidiary of Cyient but function independently with its own leadership team.
Will all existing semiconductor properties and human resources be regrouped into the new entity?
The specific details regarding personnel allocation are still being finalised. The new entity will launch with a smaller, focused team, primarily comprising critical resources. As demand grows, the team will be expanded, potentially incorporating the entire existing semiconductor workforce.
Will the new company focus on Cyient’s existing areas like automotive, aviation, and engineering services?
The new company will primarily focus on four industry segments for its ASIC turnkey offerings – automotive, industrial, telecommunications, and healthcare. From a domain standpoint, the company will specialise in areas like power and energy, communication, microcontrollers and System-on-Chips (SoCs).
Will the new company operate as a fabless company?
Yes, the new entity will operate on a fabless model. It will leverage its strong ecosystem of partners, including fabs, OSAT players, and IP vendors.
Given the specialised nature of the ASIC turnkey market, will the new entity face challenges in finding qualified human resources?
The talent pool for semiconductor design is relevant for both traditional services and turnkey solutions. While there is a shortage of skilled engineers in India, Cyient has a strong in-house talent base and is actively hiring. To address the talent crunch, Cyient has established academic partnerships to develop a future pipeline of skilled engineers.
How crowded is the ASIC turnkey market in India?
The ASIC turnkey market in India is not crowded. Most Indian service companies focus on providing specific design services rather than end-to-end turnkey solutions. While there are several players in Asia and Europe, the Indian market presents a unique advantage due to the limited competition.