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IESA Confidential April 2013IESA

Opportunities in ESDM

Sanjeev Keskar/ Chairman IESA

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• Industry with the largest growth potential• ESDM products are used across many sectors

Potential for $400 Bn revenues in next 10 yrs

• No domestic industry, despite having large talent pool & a large domestic market

• Current base is only of low value-add manuf.ESDM imports in India can exceed oil imports by 2017

• Currently it is <2% in India; In China >20%• Large potential to increase value-additionESDM manufacturing can

become 10% of GDP

• Communication and Strategic Electronics are key for protecting national securityNational Security & self

reliance in defense & telecom

• Inclusive- since it will create high-end as well as manufacturing jobsCan create over 20 Lac new

jobs

ESDM: A critical industry for India

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Importance of ESDM industry is well understood• Government and Industry committed to growing this sector• Unprecedented opportunity to build a large industry• Leveraging India’s core strengths Talent Pool + Domestic Market

Supportive Government policies• 12th Five year Plan, National Telecom Policy 2012, National Electronics Policy

2012 (all released)• Preferential Market Access- PMA (notified)• Electronics Manufacturing Clusters (cabinet approved)• Innovation/R&D funding (in process)• Component eco-system, M-SIPS, India Semiconductor Fab (notified)• Fiscal incentives to overcome disability/handicap faced by domestic industry

Industry is gearing up• Increased focus and investments happening

3

All Stakeholders are aligned..

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PRODUCT IDEA - INNOVATION• Betting on the right technology and standards, features• Innovative product design and architecture

R&D, PRODUCT DESIGN (SYSTEM + HW + SW)• Creation of IPR (Product IPR; Patents)• System design: Hardware, SW, FPGA/Silicon, Mechanics• Product design, development, testing/verification

COMPONENTS• Silicon components• BarePCBs, Mechanicals, Cable Assemblies• Passive components, Electro-mechanicals

ASSEMBLY (SMT), TESTING• “Board stuffing”: automated; done by EMS or in-house• Testing, final assembly and Quality assurance• Logistics, Packing etc.

Understanding ESDM “Value-Chain”

30-65%

35-50%

5-20%

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Top 20 Priority Electronic Product Markets – by TM Revenues (2013)

Mobile Phones FPD TV Notebooks Desktops Digital Camera Inverters and UPS

Memory cards and USB drives 4W EMS LCD Monitors Servers Base Stations Power Supplies

Set Top Box Printes and FPDs Routers/Switches Car Radio CFL Energy Meters

Digital Instrument Clusters Smart Cards

ProductRevenue %

of Total

Mobile Phones 38.85%

FPD TV 7.91%

Notebooks 5.54%

Desktops 4.39%Digital Camera 2.73%Inverters and

UPS2.65%

Memory cards and USB drives

2.46%

4W EMS 2.33%

LCD Monitors 2.02%

Servers 1.72%

Total of Top 10 Products

70.60%

ProductRevenue

% of Total

Base Stations 1.61%

Power Supplies 1.28%Set Top Box 1.13%

Printes and FPDs 1.06%Routers/Switches 1.05%

Car Radio 1.02%

CFL 1.00%Energy Meters 0.66%

Digital Instrument Clusters

0.58%

Smart Cards 0.52%

Total of Top 20 Products

80.52%

Indian Electronics Market: Top 20 Products by TM Revenues (2013)

Source: ISA and Frost & Sullivan

2013 Electronics Product TM =

$50.61 B

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Other Priority Products with Highest CAGR (till 2015)

Industrial Electronics• LED Lighting (CAGR =

38%)

Telecommunications

• PON, GPON ONT (CAGR = 120%)

Automotive Electronics• 2W Ignition (CAGR = 10%)

IT/OA• Tablets (CAGR = 54%)• Payment Terminals (CAGR =

19%)

All CAGR from 2012 to 2015.

Indian Electronics Market: Top 5 Products by with Highest CAGR (till 2015)

Source: ISA and Frost & Sullivan

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Top Components across 25 Products• Base Station Set Top

Box• Inverter / UPS 2W

Ignition• GPON ONT Power

Supplies

Power devices/chips

• Mobile PhonesDesktops

• Tablets Servers• Routers/Switches Payment

Terminals

Processor

• Server GPON ONT

• Set Top Box Mobile Phones

• Memory Cards/Drives Routers/Switches

Memory

• Set Top BoxInstrument Cluster

• Power Supply• Car Radio

PCB

• Mobile PhonesNotebooks

• Tablets Payment Terminals• Desktops Instrument Cluster

LCD Display

Key

Com

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nts

and

the

Prod

ucts

in w

hich

they

co

ntrib

ute

sign

ifica

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ropo

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of t

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Key factors causing disability in Indian ESDM industry

Overall disability(7%–26%)

International marketing cost

(~1%)

Taxation related(3%–6%)

Poor domestic availability of components

(3%–5%)

Poor infrastructure(0.5%–1.5%)

Higher cost of finance

(2%–14%)

Indian Electronic System Design and Manufacturing (ESDM) disability identification study

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– SWOT Analysis of Top 25 products and 4 key components : These products contribute to > 80% of Total Market & 4 “A” category components for each products to > 50% of Bill of Material. So focus on 25*4 Strategy.

– Address Manufacturing Disability for local players:• Inverted duty structure• Local component supplies.• Cost of Finance.

– Facilitate Electronics Product Creation for MSME : ESDM Resource and Incubation Center in every state which will be a facility to convert Ideas to Prototype

– Take Advantage of EMC , M – SIP and PMA policies.

How to Build Domestic Eco System

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Opportunities for Odisha State

Semiconductor content in a Electronic Product is around 15% to 20% , there is an opportunity in other components in Bill of Material for : PCB, Connectors, Transformers, Battery , Plastic, Passives ….which can be addressed by Small and Medium Industry.

Among all segment Industrial Electronics in one area where there is huge opportunity for SME sector to play big role in a applications like UPS / Inverter / LED Lighting/ Set top Box/ Security Systems / Power Supply……Electronics companies from Odisha to focus on these products.

There will be an opportunity for small EMS companies .

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Continue to work for Embedded Design companies in VLSI, Embedded S/W and H/W development.

Work to promote local manufacturing Eco System by taking advantage of domestic demand and Govt. policies.

To support Start ups and Entrepreneurs for Fabless design and Systems design.

Contribute to create job opportunities in ESDM space.

IESA Focus

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THANK YOU