Expect India’s supply chain to follow chip business

Bruce Rayner Technology Forecasters has previously identified the cost and availability of electronic parts as one downside to manufacturing in India. But recently, we’ve seen reasons to offer a bit of hope that the component supply chain in India might be improving.

In research conducted by our senior consultant, Matt Chanoff, last year for our Fourth Quarterly Forum, “The EMS Industry in India: Opportunities and Challenges,” the cost and availability of parts stuck out like a sore thumb as a problem for manufacturers in India, especially in the in-depth interviews TFI conducted with manufacturing executives for that report.

We are heartened, however, that the Indian government recently announced its Special Incentive Package Scheme, an initiative focused on attracting investments for setting up semiconductor plants and other technology manufacturing industries. Full details are to be announced in about two weeks, but in general there will be significant financial inducements, including tax breaks, for chip companies that set up manufacturing in India. We believe where the semiconductor industry goes the supply chain will follow.

In a recent email exchange with an industry executive who is plugged in to the design and distribution business in India, and who read about our research, told me that his company has noticed an increase in the number of sample requests coming from the growing design engineering services sector in India. This executive took this as evidence that component makers might follow. He will share some trend data with me next week that I’ll add to this blog.

Posted by Bill Roberts, March 2nd, 2007