ZT: Hot buttons for 2010: Convergence, green tech

While last year was bad for the economy, this recession saw most business sectors quick to react and able to absorb the impact better than they did in the past. The year saw a lot of restructuring, quick alignment of the inventory levels to lower demand and constrained capital spending. Now, based on improving macroeconomic indicators and rising surge in demand trends, industry leaders and analysts concur that the world is emerging from the global recession. So what will 2010 usher? What will it hold for electronics design engineers and managers, particularly those in the ASEAN and India? What market trends will have the greatest impact on the electronics design business? I share here some of my insights. While consumer, computing and the communication sectors will continue to drive the growth, broadly speaking, I see two main market trends that will have the greatest impact in this space in 2010. They are: convergence and green technology. Convergence
Convergence will continue to power collaboration applications. Portable consumer devices, including such devices as mobile phone handsets, smart phones, mobile Internet devices (MIDs), personal navigation systems and e-books, will see new classes: multifunction products with multiple connectivity options bolstered by greater battery life and set on decreasing form factors. Convergence of mobility and the Web will increase, and these devices will proliferate. More specifically and of gaining importance, application developers will flood this market with innovative ideas on the usage and value-added services for these products, thereby adding to their increasing differentiation. According to ABI Research, the number of paying handset-based turn-by-turn navigation users will increase to 26 million by 2010 end, with strongest growth expected in the Asia-Pacific, which is in contrast to the continuing decline in sales of personal navigation devices (PNDs) and in-dash navigation systems. The year 2009 was one in which notebook shipments overtook those of the desktop for the first time. Expect this to continue in 2010. Netbooks have attempted to fill the void between clunky notebooks and small smart phones/MIDs. This year will see more of "all-day runtime, instant-on and smartphone connectivity melded with the keyboard and usability of a netbook" kind of devices. Here too, applications (like those for Apple's iPhone) can be tapped for these computing devices. I also expect smartbooks and MIDs to ship with near-ubiquitous 3G/LTE connectivity. With carriers becoming a significant channel for all Internet-connected mobile devices including netbooks and mobile PCs because of the revenue potential of the associated services, expect the number of devices sold through the carriers to increase.  

We will see convergence in the TV space as well. To manage healthy profits amidst continued price erosion coupled with rising panel costs, the TV industry will need to innovate beyond the "expected" realms. Next-generation TVs will no longer be just about pixels. They will need to move beyond resolution and differentiate themselves. DTVs will be increasingly network enabled and tap into video convergence with the Web. In-Stat stated that DTVs are competing with computers to be the entertainment hub of the home. Sets with Internet connectivity are already commercially available in the United States, Europe and Japan. DTV revenue in Asia-Pacific is forecast to show rapid growth. Silicon embedded systems enabled convergence in the automotive sector. As automotive digital electronic systems and onboard networks increase, so will the semiconductor content required for designing them. Several of these automotive electronics applications originated from the consumer market. Digital content like navigation systems, rear seat entertainment systems and driver assistance applications will continue to increase. There is also an evolving trend of the applications battling as value-add in the automotive market for infotainment and telematics services to the customer. 2010 will also see an increasing trend toward convergence of video with computing and connectivity in the intelligent surveillance space as well. Green growth
The other major market trend affecting the electronics design business is "green technology." Green thinking will get more pervasive in 2010. Lighting and automotive sectors are two main areas for this. Finding ways to harness technology and helping customers implement it will translate into creating energy-efficient lighting like low-powered LEDs in automobiles, consumer electronics and conventional lighting or innovative products using solar panels. Maximum power-point tracker (MPPT) charge controllers as well as solar inverters are needed along with solar panels, and they will fuel this growth. New uses for optoelectronics such as infrared illumination for applications like night vision cameras, security and video surveillance will grow as well. Government policies to promote power efficiency will be a key driver for the OLED lighting market. The automotive sector is also ready for a higher energy efficiency approach. Power electronics is a key technology for hybrids and represents 20 percent of the material costs. The power module market, today dominated by Toyota who manufactures the module internally, will see the entry of semiconductor companies like Infineon, Fujitsu, Mitsubishi and STMicroelectronics. A shift to more fuel-efficient vehicles for commercial and consumer markets will create opportunities in this market. Regional outlook
Coming to regional impact and outlook, while the economy meltdown was felt everywhere, some countries, like China and India, were able to cushion the impact better than others. With the interdependent link between the electronics industry and the GDP, there are strong indicators that with the global GDP turning positive, the electronics industry is well-positioned for recovery. Couple that with U.S. and China stimulus packages totaling $1.4 trillion dollars much of which is to be spent in 2010.

China's IC industry has benefited from a series of economic stimulus policies—the booster plan for the electronics and information industry, rural household appliance subsidy program, household appliance old-for-new subsidy program and 3G network construction. With the design sector maintaining a 9.7 percent growth in the first half of 2009 while the IC manufacturing and packaging sectors plunged, China looks set to lead the electronics market growth in 2010. However, there are signs of manufacturing moving away from China with many OEMs rethinking their manufacturing plans. The recent downturn showed the fragility of the country's supply chain when several companies there went bust leaving their customers in a frantic search of alternate supplies at a short notice. In India, Bangalore, Hyderabad and Chennai together constitute a golden triangle: chip design in Bangalore, chip and photovoltaic (PV) cell manufacturing in Hyderabad and EMS manufacturing in Chennai. Adding to the huge opportunity of urban demand for electronic gadgets, there is also a vast, untapped opportunity for locally made products in India's rural market, especially for telecom and wireless applications. Growth trends are visible in that country across security surveillance, solar energy and LED lighting. A growing middle class coupled with a low penetration of flat panel TVs will fuel the transition from CRT to LCD TVs. In Taiwan, with booming mainland auto market as a key regional focus of its auto electronics, the government announced the launching of a program called "Project to Establish Indigenous Technology for the Automobile Industry" in August 2009. The project focuses on RFID service modules, telematics systems, auto lighting, LED headlights, parking systems and tire pressure monitoring systems and carries a larger thrust in 2010. The government plans to catalyze the indigenous green energy industry and develop Taiwan into the third largest solar-energy producer. It has earmarked $758 million in the next five years to subsidize seven green-energy industries: PV, lighting, wind power, bio-fuel, hydrogen energy and fuel cells, energy IT and electric cars. Mediatek will continue to lead IC design market in Taiwan and was expected to surpass Qualcomm in terms of shipment volume in 2009. Going over to Vietnam, with low labor costs and an educated workforce, the country was seen as a potential hub for IC packaging and assembly. However, the path ran into snags when first Intel and then the IC packaging start-up, V-Caps, postponed their backend facilities. Intel's Vietnam facility, when completed, will supposedly be the largest single factory within its assembly and test network. However, analysts believe that the government's road map is clear and it is working towards establishing the semiconductor industry and boost its exports. This year is set to be the watershed year for the country's backend industry. Expect 2010 to be a recovery year for electronics design with China and India predominantly poised to lead and with convergence and green technology becoming mainstream. - Meenu Sarin
VLSI Consultancy