The Seventh Wave - Pakistan’s Chance to Achieve Escape Velocity

Brother,

Not to disappoint you, I dont think laggards like Pakistan and India can do something great in the field of Electronics and Semiconductors, particularly manufacturing.

There are many reasons to it. The technology of E&S changes very fast therefore the whole system should be geared up to change very fast. Then, it needs state-of-the-art world class infrastructure including roads, ports, cargo handling points etc. which is very capital intensive.

India could do something in IT because creation of infrastructure for IT was relatively easy. You need only wires to connect. You can do away with roads,ports and other such physical infrastructure.

Pakistan missed the IT bus because it thought that some business would nevertheless spill over to Pakistan and therefore did not try very hard. It waited for lady luck to smile on it. That did not happen. Apart from India, other centres like Ireland picked up whatever was available.

A good area where an Indo- Pak joint venture can wipe out the competition from the rest of the world.

Too bad it won`t happen...

If only US$3 billion and world class infrastructure are the only prerequisites, then most of the gulf countries, UAE in perticular qualifies for chip making industry. These countries can hire expat skilled man power as they are doing now.

A strong presence even without a foundry, such as in design, development, testing etc,. domestic market, large pool of highly skilled technical as well as managerial people, intellectual property (IP) protection laws, efficient waste management processes, willing partners from all over the world ( Taiwan for ex.) for an industry which is essentially global in nature are some other important prerequisites.

The Indian semiconductor industry generated revenues of $3.25 billion in 2005. This is expected to grow to $14.4 billion by 2010. The current workforce involved in semiconductor and embedded design is about 75,000 people, which is expected to rise to 286,000 over the next five years. http://www.fsa.org/publications/isa/index.asp

India already has chip design and devlopment centres,application development companies and other supporting activities like chip design and design automation for almost all major IDMs and fabless companies. These days chips are incrreasingly embedded with software in which India has an edge.

The domestic mobile industry is booming, and electronic manufacturing service providers such as Sony Ericsson, Elcoteq, Flextronics and Nokia have set up shop in the country. Taiwan Semiconductor Industry Association (TSIA) is enthusiastic about investing opportunities in India. According to them ``The growth of the Indian domestic market is attractive``. Recognising India`s core strengths in the two areas of the semiconductor triple play - design capabilities and software development, including EDA (electronic design automation) tools - major Taiwanese chip and electronic hardware manufacturers are keen on tie ups with Indian firms Please follwo: http://www.zdnetindia.com/news/hardware/stories/152752.html

Pakistan couldn`t hack it in the IT world and now wants to jump to semiconductor fabrication?

is this satire?

Dear Imran Mustafa Sahib:

Thank you very much for a timely article. Most of what you have written goes straight to my heart, as I am a degreed Electrical Engineer from NED University, Karachi. I have always wished that Pakistan would be somewhere close to the upper tier of the developing world. Unfortunately it is not. This world is broken up into 1:3:2, which means that 1 Billion people of this world are classified as rich country, 3 Billion of the world population are considered as developing, and the rest 2 Billion are considered as poor country. I believe that Pakistan is considered as a poor country.

I do have experience in working in semiconductor labs of Texas Instruments and Motorola, and I do understand the functioning of FABs. You are correct a typical FAB cost is approximately $3B. The other infrastructure needed for semiconductors are the availability of engineers who are in this field of semiconductors. Pakistani universities are producing at most less than 5,000 Electrical Engineers per year, and most of them shoo away into the computer/software engineering.

Pakistani GDP is approximately $100B and the country has $12B in foreign reserves (whereas India has over $150B). If we can beg or borrow money from China, the west could consider this is as another market penetration by the Chinese. The total US dollars reserves is approaching $941B with China, and this is creating a nauseating effect in the US.

Considering that technology is only 5% of the US economy, should we be investing the funds that are not (as of yet) available in Pakistan, in this industry? Most prudent though would be to invest in those areas of Pakistani economy where she has comparative advantage. And that for the moment seems to be in the old economy infrastructure. We have over 150 million people who can be made to be the best plumbers, mechanical installers, roadway contractors, railroad constructors, etc. The efficient use of Pakistani labors is the way to the immediate future for Pakistan. Spending of billions of dollars in fruitless pipe dreams is not what is warranted for Pakistan.

Respectfully submitted,

Continuing with my thoughts from post #5.

Through public/private partnerships (PPP), Pakistan could develop the transportation industry by installing tollbooths on highways and privatize Pakistan Railways, develop water and waste treatment plants, and develop power and energy plants.

I do agree with you that as a first step, Pakistan could get world recognition as a design house of semiconductors, sort of consultants in the design of new chips etc, creating photo-mask for the new design, and send it to the semiconductor manufacturing plants existing in China (or even India, if a buyer country is developed). Since, you have acknowledged that {top level knowledge and human capital is not our forte,}, it is far better for Pakistan to develop this knowledge based society in the next decade to say the least.

It is about time that the Pakistani intellectual community should realize that this knowledge-based society is moving extremely fast, and they must provide leadership and guidance to their next generation.

I realize your idealism about Pakistanis in the quality control area. {a strict quality control regime and a trouble free operation} Without getting too patriotic, where did you get this concept that Pakistanis make anything with the highest quality in mind?

Taking the Philippines or the Singapore example would not work for present day Pakistanis. To be exceptionally good technically, we would require a complete over haul of Pakistani culture.

For organizational transfer of knowledge to Pakistan, one would expect an organization of Pakistanis in the US who cares about knowledge transfer to Pakistan. I am not familiar with any such organization.

{Organizations such as the Silicon Valley based OPEN (Organization of Pakistani Entrepreneurs) are ideal platforms to act as transit mediums for the transfer of not just technology but the actual business as well.}

The overall goal of any organization should be clearly defined and filled with people who are involved in that particular function. Just calling one body as Entrepreneurs, and then having majority of its membership who are employees, could never make the functionality of the organization successful. Of course, like any other entity, the marketing effort of this organization is the same as in almost all other high technology business, blowing too much hot air, and not enough McCoy.

Respectfully submitted,

even by the lame-assed standards of this website, this is a pretty badly written piece of work - as if the author is writing an answer for his inter commerce ka percha where marks are given based on length of response and the ability to use moth-eaten english expressions. and just as 99.9% of responses to inter commerce ka percha, this article is complete crap.

philippines economy is a little smaller than that of pak. as a percentage of gdp, philippines exports amount to nearly 50% compared to around 14%-15% for pak. electronics comprise approximately 70% of phils exports. cotton and textiles comprise 60% of pak`s exports. yet despite phil having such an overwhelming dominance in exports, pak`s economy has out performed phil economy over the last 4-5 years. pak`s gdp has grown at a faster pace since 2001 and pak has attracted more in fdi than phils has done over the last couple of years.

phils dominance in exports has also not had a significant impact on its government finances. phil government`s haaluth is more khasta than that of pak. as a % of gdp, phil government debt amounts to 70 % compared to 55% for pak. similarly, philippines export sector has not had a make big difference to the broader corporate sector. market cap of manila stock exchange is the same as that of kse while over the last 3-4 years, kse has out performed manila by wide margin. i can go on and on but the bottom line is focus on tech sector has not made an impact on broader economy in phil and wont make a difference in pak should this become an overwhelming policy goal for the govt.

so what will make a difference to pak economy? targetting the rural sector should be the main priority because thats where the poverty is greatest in pak. i can expound more on that but i wont because a website that publishes nonsense like this article does not merit a serious response.

btw as far as future growth is concerned, imf had something to say about it today:

http://asia.news.yahoo.com/060904/3/2pelx.html

IMF sees high growth in Pakistan over medium-term

``KARACHI, Sept 4 (Reuters) - The International Monetary Fund (IMF) said on Monday the Pakistani economy is likely to sustain a high economic growth in the medium term, on the back of a strong pick-up in domestic and foreign direct investment.
``In the mission`s assessment, the prospects of sustained high economic growth in 2006/07 and over the medium-term remain excellent,`` the IMF said at the conclusion of annual consultations with the Pakistani authorities.

The assessment is based on ``evidence of a strong pick-up in domestic and foreign direct investment, as Pakistan has increasingly been viewed as a promising destination for investment``, it said in a statement...``

imf describes the recent economic developments in philippines a little differently than this website does. i quiote from imf`s last review of phil economy:

http://www.imf.org/external/pubs/ft/scr/2006/cr0692.pdf

...RECENT ECONOMIC DEVELOPMENTS

Growth has slowed in 2005. GDP grew by 4.6 percent y/y in the first three quarters
of 2005, down from 6 percent in 2004. Weak exports and a decline in investment served as a drag on activity. Private consumption has been supported by surging remittances and, to date, has shrugged off the effects of high petroleum prices. On the production side, services such as business process outsourcing (BPO), telecommunication, and tourism remain key growth drivers. Job growth was limited to 2¼ percent in 2005, insufficient to substantially reduce unemployment, which remained high at 10.3 percent in the fourth quarter.

4. The balance of payments has been in surplus. Exports grew by only 2½ percent in
the first 11 months of 2005 (y/y), weighed down by anemic electronics exports which are not
benefiting from the regional recovery (Chart).

...Upon beginning its term in mid-2004, the administration faced critical economic
problems. The unchecked fiscal deficit and build-up of external debt since the Asian
Crisis had left the economy dependent on external borrowing and vulnerable to changes in
market sentiment.

...Meanwhile, the economy had underperformed, with per capita GDP growth averaging 1 percent per annum from 1998-2003, and almost half the population living on less than $2 a day.1 Much of the relatively modest growth performance can be attributed to weak investment (Chart)....``

Recently a world body recognized the advanced economies of certain developing countries - China, Turkey, South Korea, etc.. in a bid to give them more clout in decision making. Neither India nor Pakistan were listed in this recognition. :(

Recently a world body recognized the advanced economies of certain developing countries - China, Turkey, South Korea, etc.. in a bid to give them more clout in decision making. Neither India nor Pakistan were listed in this recognition. :(

IEEE spectrum

Getting in on the Action

It was as if, during the final quarter of 2005, the top players in a high-stakes poker game had brooded over their hands for months or years and then, all at once, placed their bets. IBM, Intel, and AMD all announced major investments in Indian chip design. Cisco, not generally thought of as a semiconductor maker, anted up as well. And even Microsoft seemed to be moving in to take a seat at the table, should the pot get juicy enough.

A major development was the announcement in November that HCL Technologies, India`s top technology services firm, would do design work on IBM`s Power Architecture family of semiconductor devices—chips that are customized for diverse hardware products, including Microsoft`s Xbox game consoles and high-definition television receivers.

IBM already has Power Architecture design centers in Bangalore, as well as in China, Germany, Israel, Japan, and Switzerland, but this is the first time that it has outsourced such work. It`s expected that an HCL design center in Chennai (Madras) will grow from barely more than a couple of dozen employees at present to as many as 1000 within two years.

At the end of November, AMD chief executive Hector de J. Ruiz announced that his company would join a consortium and supply technology to build India`s first semiconductor plant, which is expected to cost about US $3 billion. Obtaining foreign investment in the venture, called SemIndia, was a high priority for the government—China already has close to 50 fabs—and relations with Intel soured when its chairman, Craig R. Barrett, dragged his feet. Not to be outdone, however, Intel announced on 5 December that it would invest upward of $1 billion in India over the next five years, more than it has spent in the country in the last decade.

Intel already operates its largest chip design center outside the United States in Bangalore, where it employs more than 2500. About $800 million could go for expanded R&D operations in India and $250 million into venture capital projects. Broadcom also has a thriving R&D facility in Bangalore and has announced it eventually will outsource production of chips for mobile phones to SemIndia. Its chief technology officer, Henry Samuele, said on a visit to India on 1 December that the performance of the company`s Indian teams had surpassed his expectations.

India Concern to Design I.B.M. Chips
By SARITHA RAI

BANGALORE, India, Nov. 17 - I.B.M. announced an agreement Thursday establishing an Indian outsourcing company, HCL Technologies, as the first design center outside I.B.M.`s own walls for its Power Architecture chips.

The deal highlighted India`s growing role in the design of high-end chips. The country is better known as a hub for outsourcing of software development and comparatively low-end back-office work.

The agreement is also in line with I.B.M.`s plan to adopt a more open strategy in its microprocessor business by setting up design centers around the world to help customers in areas like wireless technologies, consumer devices and networking by developing customized chips.

At Power Architecture design centers, I.B.M.`s chips are tailored for products as diverse as Xbox game consoles, high-definition TV`s and pacemakers.

Traditionally, microprocessors like I.B.M.`s Power chips were optimized by shrinking the size of transistors and fitting more into each chip to increase processing speed.

But with newer, tightly packed microprocessors consuming more and more power, optimization in performance comes from adapting microprocessors to different uses.

I.B.M. has its own Power Architecture design centers here in Bangalore, and also in Israel, China, Japan, Switzerland and Germany besides the United States.

I.B.M.`s agreement comes in the wake of estimates that India`s semiconductor design industry is growing, albeit from a small base. The industry will triple by 2010, to about $1.72 billion from $624 million currently, according to a recent forecast by iSuppli, a research firm based in El Segundo, Calif.

``Outsourcing chip design to a low-cost center like India with a large talent pool is a trend of the future,`` said Jagdish Rebello, iSuppli`s principal analyst for communication systems.

As with other types of outsourcing, the availability of skilled, English-speaking workers at lower costs - design engineers in India are typically paid a fourth of American salaries - is prompting chip companies to expand in the country, aided by clearly drawn intellectual property laws.

``The mind-set about what is possible and what is not in India is changing and the country is becoming a development center for products, software and chip design,`` said Sham Banerji, head of software development for the Indian unit of Texas Instruments, one of the first multinational companies to set up a captive design center in the country.

HCL Technologies, India`s fifth-largest technology services outsourcing company, with $814 million in revenue, will pay a licensing fee to I.B.M. for its use of the Power technology and will split revenue with I.B.M. when the technology is sublicensed to others.

``I.B.M.`s goal is to make Power Architecture solutions as pervasive and open as possible,`` said Ron Martino, I.B.M.`s director of Power products.

The outsourced design center will be based in the southern Indian city of Chennai, a site with 25 employees currently. But company executives said this could grow into a 1,000-employee operation in two years, depending on demand.

The center will offer equipment makers a range of Power Architecture solutions, including sublicensing the Power group of embedded microprocessor cores. Indian companies have progressed in the value chain from doing back-end work to developing architecture, said S. R. Dinesh, program manager in Asia for the electronics practice of the Frost & Sullivan consulting firm.

India`s own domestic demand for electronics and consumer electronics is also growing rapidly.

The large number of companies setting up chip design centers illustrates the maturing of the industry in India. Nearly 125 chip design companies are now in India, mainly in Bangalore.

``Every major chip design multinational has set up operations in the country,`` said Poornima Shenoy, president of the India Semiconductor Association, a trade body representing semiconductor companies.

Ms. Shenoy said there was heightened activity, with semiconductor companies hiring as many as 1,000 graduates in India annually. Chief executives of international technology companies are routinely visiting, she said, ``and all this is an indicator that India has moved to the next level.``

The Indian development center of Intel, for example, has grown to 2,500 employees from 1,500 at the end of 2004. India is Intel`s largest design center outside the United States.

But India does not have manufacturing infrastructure, and experts see this as a drawback to a larger role in the chip design process. The nearest chip foundries are in China and Taiwan.

Without proper infrastructure base Semiconductor revolution will be just a pipedream.Chinese are hard to beat in terms of ingenuity and costs of production.As long as cheaper chip design options are available with countries like Taiwan and Malaysia anyone will think twice before investing here in Pakistan.If another rat race is started like IT, it`ll be a bigger blunder as there`ll be no industry to absorb these ``techies``.Till then FPGAs se kaam chala baba, Lagay dum mitay ghum.

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re #15

Chowk rates every interactor by an esoteric number called ``interact index``. If your interact index falls to 0, all your posts are automatically filtered. How the number is decided is known only to the inner circle. FWIW, most garden variety interactors have an interact index of 1. The ``special`` people like Ms. Versey and ferozk have interact indices of 4. Dunno if there exist any interactors with an index>4. If Ms. Versey is 4, I doubt the chowk powers that be can give a higher number to any other person.