India has been under strict lockdown for several weeks and is expected to continue for at least another two weeks in its major cities. What has that meant for the electronics industry in the country?
India has been under strict lockdown for several weeks and is expected to continue for at least another two weeks in its major cities. What has that meant for the electronics industry in the country? Being a key part of some companies’ global supply chain for the design, development and validation of chips and systems (see our special report, The Indian Semiconductor Industry Is Growing Up), is it coping, and what are the plans and opportunities when lockdown is finally lifted?
This was the topic of a virtual panel discussion at the end of last week among several key executives from India’s electronics industry representing Texas Instruments, NXP Semiconductors, Mediatek, Western Digital and Saankhya Labs. The overall conclusion was that research and development was largely unaffected and actually became more efficient, hardware testing and validation in labs is impacted, and that there won’t be any rush to go back to offices once people are allowed to go out again.
Moderated by Faisal Kawoosa, founder of technology research firm techARC, the panel members were:
Current challenges arising from lockdown
The panel was broadly in agreement that the current telecoms infrastructure in India was enabling a swift transition to working from home for most of its teams, with some challenges for those who needed to carry out hardware validation, as well as supply challenges due to lack of internal flights in the country.
Texas Instruments’ Khushu said that as the second largest development center for TI outside the US, the biggest challenge was how to ensure projects assigned to the India team are executed on time. “Many of us have labs which don’t stop,” he said, referring to the 24/7 operation through three continuous shifts. Only 5% of his staff are working from the office. He added that the company ensures there is a lab technician in the office who can be directed from those working from home, for any specific laboratory requirements.
Mediatek’s Jain echoed these sentiments, saying that operations have continued with effective working from home for R&D activity and roadmaps continuing to be followed. “But manufacturing is quite impacted,” he added.
Explaining the challenges for manufacturing, Western Digital’s Tyagi highlighted the disruption in the supply chain. He said the combination of many components in the supply chain originating from China plus the 5x increase in freight costs in the last 4-6 weeks have meant it’s difficult both in component sourcing but also in the huge erosion of margins resulting in the differential between the costs quoted to customers and the actual price after the escalation in freight costs.
The other issue is the lack of transport options internally in India. Tyagi cited a customer in online education, who had ordered flash memory cards. They managed to get a slot with Fedex to get the shipment into India at Delhi airport – but product is sitting in Delhi because there are no internal flights available to ship them to Bangalore.
NXP’s Gupta said the company has some 2,500 engineers across four locations in India, 90% of whom have said their productivity has gone up since lockdown – this is often due to the fact that they can eliminate some 2-3 hours of daily commute time. “However, 5% of our people are dependent on office infrastructure, such as for security critical applications, and that is more challenging.” He echoed others regarding transportation of boards internally within the country being challenging.
Meanwhile, Saankhya Labs’ Mallapur, said that being a smaller company with less than 200 employees, they were already used to working from home with VPN infrastructure in place. Like the others, he said they have seen good improvements in productivity in parts of development where ideas and creativity were needed. “Where we have been impacted though is in the hardware functions, where people need to be in the lab.” Like the others, he said they would often have two people in the lab receiving direction from those at home needing the specific services.
What happens after lockdown?
So as and when lockdown does eventually get lifted, what are the companies planning to do? Well all of them said they won’t be in a hurry to send people back to the office. Tyagi commented, “We’ve worked so efficiently there’s no reason to rush back.” All the executives agreed that the labs and those who deal with hardware would be first priority, but that expectations would need to be re-aligned, especially in that ‘just-in-time’ processes can no longer be expected and that buffers would need to be built in to the entire supply chain.
Another challenge would be to maintain social distancing in the larger labs. Khushu pointed out that having 1,000 people working side by side in the lab while keeping distance between individuals would be challenging, especially since they need to serve around 50-60 business units within TI. Gupta said, “I would be cautious in sending my engineers to work even after lockdown is lifted.” He added, “Our goal would be to make sure those who need office infrastructure can do so safely and without fear.”
As regards recovery and opportunities beyond lockdown, Tyagi said it would take at least 3-6 months for any sign of recovery, and that revenue growth is unlikely this year. He hopes that the issues in supply chain might stimulate Indian startups to focus on developing and making products in India itself. Jain said they’d look at re-evaluating their supply chain strategy in the long-term and look at how operating models need to change.
Mallapur believes long term opportunities will emerge in connectivity products for telecoms and internet of things (IoT) as a result of Covid-19 and the other side of lockdown. “We will see a big jump in demand and innovation. Telemedicine will be a market in which there will be good demand.” Khushu concurs with this, indicating medical devices is going to be an area that will come into more focus. Also, he said 5G will be deployed much faster.
One side-effect of needing to maintain social distancing will be the bucking of previous trends that were focused on reducing cars on the road, and ultimately, emissions, according to Gupta. “Going to work with masks and distancing are likely to be the new normal. Social distancing will also push new private car sales, going against previous trends.”