India Should Focus on Trailing Nodes

Article By : Stephen Las Marias

Synaptics' Michael Hurlston says rather than chasing advanced nodes, India should focus on trailing nodes "because that is where there is a capacity crunch."

Through its semiconductor solutions, Synaptics Incorporated enables intuitive user experiences with differentiated technologies in touch, display, biometrics, low-power edge AI processing, and connectivity.

With roughly $1.8 billion in revenue, the company, in semiconductor speak, is at the smaller end of the scale, according to President and CEO Michael Hurlston during an interview with EE Times Asia.

“But we are big enough to have some critical mass and be able to work with some of the largest product companies in the world,” he adds. “We are lucky enough to have exposure to almost every major semiconductor end market because we talk about ourselves in three different businesses: one is mobile, where we sell semiconductor solutions to mobile phone manufacturers; the second is PC, where our business is very much targeted on products for portable computing at work and home – laptops, notebooks and such; and then our third business is kind of a catch all—and that’s our IoT business. All our business and customer engagements, to varying degrees, are supported by the company’s expertise in low-power edge AI processing and context-aware computing using various sensor inputs, including vision and audio.”

At present, Synaptics’ IoT business accounts for about 70% of its total revenue. “The IoT business serves a bunch of end markets we go into,” says Hurlston. “We have products for wireless, we have products that go into automotive, and we have certain products that go to do video class products—whether those be monitors or set-top boxes for TV playback.”

Michael Hurlston

Hurlston notes that while being a relatively small company, Synaptics has the advantage of a very diverse set of products and a broad set of market opportunities that help it remain successful when dips occur in a specific sector.

India: Opportunities and challenges

Synaptics is currently strengthening its presence in India. The reason the company is expanding in this region is not so much for costs, but because of the availability of specific engineering talent for developing its semiconductor solutions, according to Hurlston.

“What we see in India is an incredible education system that is able to create a very robust supply of talented labor, talented workers,” he explains. “This doesn’t exist in the United States and Europe to the same degree. It certainly exists in China; I think China is doing a very good job of producing engineering talent. But our immediate opportunity is in India and that’s why we’re here.”

The challenge, however, is that there is not a lot of product companies in the region. “Our ability to actually sell our semiconductor solutions and generate revenue in India is fairly limited,” says Hurlston. “You cannot think of a really a top-tier electronics brand that has an Indian label. So, most of the electronic goods that are sold in India are coming from foreign manufacturers and foreign companies. But I think there’s an opportunity here in India to create more of a product ecosystem.”

Sanjay Saha, Senior Director of Silicon Engineering and India country manager for Synaptics, agrees, saying that one sector that is lagging in the country today is end-to-end IC design.

“That is where Synaptics is playing a role —“helping expand that ecosystem of developing end-to-end silicon, from the concept of the IC to fabrication through the foundries and developing the silicon. We are doing that here in India, and that’s where I think Synaptics is playing an important role,” says Saha. “The other piece, which I think is lagging in India, for example, is [end] product design. As Michael said, we don’t have any product design companies like Apple or Samsung, that would consume Synaptics or other IC vendors’ products.”

IP: The important part in the value chain

While the Indian government has stepped up its efforts to attract manufacturers to build bases in the country, what is critical to India’s success is intellectual property (IP).

“If a country really wants to control its own destiny and own an important part of the value chain, intellectual property, such as the underlying designs that end up getting manufactured in these big factories, is crucial,” explains Hurlston. “What would be good is to have an IP that is actually made in India, created in India, and kept in India. There’s an incredible wealth of talent here, probably second to none in the world. If you think about the labor force and the amount of IP that is getting created here, which ultimately is part of a multinational company’s success, that seems like an opportunity for India to change and grow.”

Saha agrees, saying that more than manufacturing, the most important step to take is hardware IP design.

“I think what India has done in the software domain is possible on the hardware side—a similar kind of an ecosystem and a development effort for both digital and analog designs. There is no Indian-owned or -headquartered semiconductor company with its own IP content. That should be a focus more than manufacturing. Then, the second piece, before going into manufacturing, is the product design and the product architecture; owning the product. Manufacturing today can be done anywhere. That model is already mature. But the hardware IP design, the product design, conceptualization, these are domains where India should be focusing,” Saha says.

Hurlston explains why IP is critical. “Margin, in a business sense, is really an indicator for where the value is. If you look at the margins of semiconductor companies, they’re typically 55% or so, which means more profit is being generated than the cost of the goods. If you look at manufacturing companies, their margins are typically 30%,” he says. “So, if margin is a proxy for value in the value chain, you would see that the IP is where the value exists. It is much more difficult, over the long haul, to generate IP than it is to become a manufacturer—even though it takes years and years to build manufacturing.”

He notes that creating differentiated IP will take a semiconductor company about 10 or 15 years. “In my view, that’s where it should be, and India already has a huge head start. There are a lot of engineers here that have been working at multinational companies for many years. The only barrier to entry and success is the lack of a vibrant venture community. I think that there is not a lot of money flowing into the Indian economy that can shore up and fund semiconductor startups,” says Hurlston.

Chip shortage: The underlying issues

One of the key challenges that continue to plague the electronics manufacturing industry right now is the ongoing semiconductor shortage. But according to Hurlston, there is already light at the end of the tunnel.

“In fact, I would say in our specific case, we are probably all the way past supply constraints,” he says. “What I worry about is if shortages will return in relatively short order because the underlying issue really has not been solved yet.”

That underlying issue is the insufficient manufacturing capacity for certain types of semiconductor devices amid the explosion of applications that require chips.

“You have cars that have evolved from mechanical to electrical. You have PCs, mobile phones, and you have IoT. Nobody expected to see semiconductors go into refrigerators and washing machines. Nobody expected products like drones that are full of semiconductor content,” Hurlston points out. “The demand for semiconductor solutions is huge, and the capacity has not really caught up. The demand for chips for these types of products can be satisfied with what we call trailing-edge semiconductor nodes. In general, there is capacity available for very advanced processes for certain applications like computers and mobile phones, but many end products don’t require chips manufactured in the most leading-edge semiconductor processes.”

Trailing-edge semiconductor nodes, according to Hurlston,  are not seeing the same constraints as more advanced processes. “We are on older nodes, older processors,” he says. “40nm, 65nm—these are the older, more mature processes that are used for a wider variety of applications, as well as those that require higher voltages, such as power circuits and display drivers. What I am worried about in the long term is that while we are seeing supply easing now, because there has been a lot of inventory that has been built up in the channel, in a quarter or two, we could be right back in the same situation if we don’t increase manufacturing capacity for the trailing process nodes.”

“There is plenty of capacity on the advanced, leading-edge semiconductor process nodes. What is missing is capacity for older nodes, and what happens is that fabs get depreciated. New fabs are focused on these advanced technologies because they have not gone through the depreciation cycle,” says Hurlston. “People are willing to invest more in advanced processes because they go into high-volume microprocessors or cellular baseband chips. There is plenty of spending going on to build that capacity, but governments and the industry really need to focus on investing in older nodes.”

According to Hurlston, rather than chasing these very advanced nodes—which is very difficult—India could make a mark by focusing on trailing nodes, “…because that is where there is a capacity crunch.”

“Ultimately, it is actually easier to get up and running on more mature—stable—process nodes,” says Hurlston. “But there are some fundamental underlying issues in India, such as the availability of water and other natural resources that are needed to build one of these semiconductor manufacturing plants – even for older processes.

Synaptics’ India journey

Hurlston reiterates that India is a great source of engineering talent. “Synaptics acquired a 20-person start-up company that was based in the U.S., but has all its labor and engineering talent based in India. That became the seed for what ultimately became 1,000 engineers in India,” he says. “Our business, in this case, was wireless chipsets—we went from $100 million in revenue to over $3 billion, largely because we built our engineering capability for this business in India. It’s a unique strategy to have the engineering team in India take the chip from concept, through design, through backend, all the way to the point that it would be fabricated—true end-to-end IC design.”

“If you look at the big semiconductor manufacturers that operate in India, they have Indian design centers that do a part of the design: one part is done here, another is done in the U.S, and another might be done in Europe, and then somebody’s responsible for bringing the whole thing together,” says Hurlston. “Sanjay and his team invented this idea but pushed for this end-to-end design strategy. We were able to build that model and as such we were able to attract engineers much more easily because they can participate in this process and experience.”

Saha echoes this. “That was one of the key factors to attract the talent that we have in the Synaptics India Design Center—owning the complete product from the concept to the silicon. And it is not just the hardware or the ASIC design piece, it is also the systems design, the algorithms, the software drivers getting developed, the whole end-to-end product development, which we supply to our top customers,” he explains. “Apart from compensation, product ownership is one of the key factors to attract the talent. As we have done in our prior, successful organization, we are replicating the same story here in Synaptics India, especially for the wireless market, about which we are very bullish.”


Stephen Las Marias is the editor of EE Times Asia/India. He can be reached at


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