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Semiconductor Hubs for Research & Innovation
           Overview of the report




This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted,
  or reproduced for distribution outside the client organization without prior written approval from Zinnov
Scope



  The report aims to analyze the leading global hubs for semiconductor research and innovation talent
   and ecosystem
  A structured mechanism was
   used to identify the leading
   destinations for globalizing
   semiconductor R&D. The                                 Cambridge,
                                                                                            Beijing, China
                                                                                                             Seoul, S. Korea
   report provides key insights                                UK

   on the identified locations                                                                                 Shanghai,
                                                       Nice, France                    Hyderabad,
   (highlighted in the map)                                                               India
                                                                                                                 China
   including                                                         Haifa & Ra’anana,                          Taipei,
                                                                            Israel                              Taiwan
         University Ecosystem
         Competitive landscape                                                      Bangalore, India
         Government initiatives and
          incentives                                                                                    Singapore
              Financial incentives
              Special programs
              Infrastructure investment
         Talent Heat map
              Installed Base
              Technology Depth
              Fresh Graduate
              Mobility

     Note: This Preview report has summary of only the top 10 cities
                                                                                                                           2
Agenda




         1   Semiconductor R&D hubs – an overview


         2   Location insights




                                                    3
A structured mechanism was used to identify the top locations for semiconductor R&D




      Ecosystem analysis on 30 global
      cities with semiconductor R&D          Focus Benchmark                 15 Cities
      talent



   1. Presence of semiconductor MNC firms
   2. Competitive domestic players in the                        Cities
      semiconductor market
   3. Large base of skilled manpower          Taipei, Taiwan               Shanghai, China
   4. Vibrant startup community
   5. Strong university ecosystem           Seoul, South Korea             Bangalore, India
   6. Supportive government policies           Nice, France               Hyderabad, India
                                                Singapore                     Dallas, US
                                             Cambridge, UK                  San Jose, US
                                               Haifa, Israel               Santa Clara, US
                                              Tel Aviv, Israel            Dresden, Germany
                                              Beijing, China
Asian and European cities emerged as the most suitable destinations for semiconductor
     related work
                                                 Top destinations for semiconductor research and innovation




                                                                                  Dresden, Germany                               Seoul, S. Korea
                                                  Cambridge, UK                                           Beijing, China

                                                      Nice, France

                                                                                                                                 Shanghai, China
                                   Dallas, US                                                     Hyderabad, India
                                                                     Tel Aviv, Israel
   San Jose, US
                                                                       Haifa & Ra’anana, Israel                                  Taipei, Taiwan
     Santa Clara, US

                                                                                              Bangalore, India


                                                                                                                           Singapore




Source: Zinnov Database, Zinnov Research & Analysis                                                                                                5
Eight cities have been identified to be fast emerging as next preferred locations
     for semiconductor offshoring
                                                Emerging Locations for Semiconductor Offshoring


                                             Dublin, Ireland                          St. Petersburg, Russia


                                                                                           Moscow, Russia

                                           Bristol, UK




                                                               Ramat Jan, Yakum, Israel


                                                                                                           Clark & Baguio, Philippines




Source: Zinnov Database, Zinnov Analysis                                                                                                 6
Though global sourcing began primarily in the 1990s, the most active period in the
     globalization of semiconductor R&D was in the years 2000 - 2005
                                                      Evolution Pattern of leading semiconductor MNCs                         High growth
                                                                                                                              Medium growth

       Bangalore, India                                   1           1           1           4           9               9             9

       Taipei, Taiwan                                                                                     2               6             6

       Shanghai, China                                                                                    3               4             4

       Beijing, China                                                                         2           5               5             5

       Seoul, South Korea                                                                                 2               4             4

       Nice, France                                                                           1           2               3             3

       Singapore                                                                              1           3               3             3

       Cambridge, U.K.                                                1           1           1           2               2             2

       Hyderabad, India                                                                                   1               2             2

       Haifa, Israel                          1           1           1           2           2           2               2             2

       Ra’anana, Israel                                                           1           1           1               2             3

                                           1980        1985        1990         1995       2000         2005           2010          2011
                                                                                                                        Year of Establishment
                                                                                                               n   Indicates number of centers
                                                                                                                                                 7
Source: Zinnov Database, Zinnov Research & Analysis
Cities in India and China witnessed the most activity during globalization as costs in these
     locations were competitive, and continue to be so, when compared to other locations
                                               Average Cost per FTE across selected global locations



                      100                                                                                                            85 88
                                                                                                                               75 80
                      80          65 68                       65 68
                            55 60                       55 60                      50 55
                                                                                         58
                                                                                                             50 55
                                                                                                                   58
       USD in ‘000s




                      60                                                        45                        45
                      40
                      20
                       0
                               Shanghai                     Beijing                   Bangalore            Hyderabad               Taipei


                      160                           25 Percentile     50 Percentile       75 Percentile    90 Percentile                 145 148
                      140                                                                                                      135 140
                                                                  115 118                 115 118                    112 117
                      120                               105 110                105 110                         105
                                                                                                          98
                      100
       USD in ‘000s




                       80            68
                            55 60 65
                       60
                       40
                       20
                        0
                                 Seoul                       Haifa                    Ra'anana                  Nice             Cambridge



Source: Zinnov Database, Zinnov Research and Analysis                                                                                              8
Predominant activity in low cost locations in India & China is development & testing; in
     comparison, high cost locations like Israel & UK have a higher share of conceptualization
                                             Average Percentage Split of Work by Functions across Locations


           Bangalore 5.00%                          30.00%                        35.00%                         30.00%

                Taipei        10.00%                         35.00%                        30.00%                     25.00%

            Shanghai 5.00%                          30.00%                        35.00%                         30.00%

               Beijing 5.00%                        30.00%                        35.00%                         30.00%

                 Seoul        10.00%                       30.00%                   30.00%                       30.00%

                  Nice             15.00%                       25.00%                      30.00%                      20.00%

          Cambridge                15.00%                       25.00%                      30.00%                      20.00%

          Hyderabad 5.00%                            30.0%                         35.0%                             30.0%

                 Haifa               20.00%                              35.0%                         35.0%                       10.0%

            Ra'anana                 20.00%                              35.0%                         35.0%                       10.0%

                         0%            10%            20%       30%         40%   50%       60%      70%       80%           90%       100%
                                              Conceptualization          Design   Development        Testing


Source: Primary Interviews, Zinnov Research and Analysis                                                                                      9
The depth of technical leadership in India and China centers is low and this impacts their
     ability to contribute at the higher end of the product value chain
                                                                R&D Employees Experience Distribution
                                                                                             2%
                                                                                  4%
                                                                                                                      4%
                                          28%                                          13%                            8%


                                                                                                                      18%

                                         13%

                                                                                       37%

                                                                                                                      38%
                                        35%




                                                                                         44%
                                       14%
                                                                                                                      32%


                                       10%


                        Head Quarters                                          India                               China
                                                    0-3 Years      4-6 Years       7-10 Years     11-15 Years   15+ Years


Source: Primary Interviews, Zinnov Research and Analysis                                                                    10
Head Quarters (HQ) has end-to-end product ownership with main focus on
     upstream activities such as conceptualization and design
                                                                                                         Activity heat map:       Low                   High




        Conceptualization                          Design                         Development                          Testing


       Concept Definition                          Feature Definition             Re-Engineering & Migration           Validation & Physical Checks


       Concept Evaluation                          Project Planning               Program Management                   Functional Verification


       Prototype Design/                           Requirement Gathering &
                                                                                  Project Management                   Unit/ Interface Testing
       Architecture                                Analysis


       Technology Evaluation                       Software Architecture          RTL Verification                     Component/ Feature Testing


                                                   High-Level Design of product   Synthesis
       Prototype Development                                                                                           Regression Testing
                                                   concept


       Prototype Validation                        RTL Coding                     Back-end Integration                 Testing Automation


                                                                                                                       Product Validation/
       Design Specifications                                                                                           Acceptance

                                                                                                                       Gate level Simulation / Formal
       Design Architecture
                                                                                                                       Verification


                                                                                                                       Technical Support




Source: Primary Interviews,, Zinnov Research and Analysis                                                                                                      11
A few high cost offshoring locations have total product ownership and serve as
     a design center along with development and testing
                                                                                                         Activity heat map:       Low                   High




        Conceptualization                          Design                         Development                          Testing


       Concept Definition                          Feature Definition             Re-Engineering & Migration           Validation & Physical Checks


       Concept Evaluation                          Project Planning               Program Management                   Functional Verification


       Prototype Design/                           Requirement Gathering &
                                                                                  Project Management                   Unit/ Interface Testing
       Architecture                                Analysis


       Technology Evaluation                       Software Architecture          RTL Verification                     Component/ Feature Testing


                                                   High-Level Design of product   Synthesis
       Prototype Development                                                                                           Regression Testing
                                                   concept


       Prototype Validation                        RTL Coding                     Back-end Integration                 Testing Automation


                                                                                                                       Product Validation/
       Design Specifications                                                                                           Acceptance

                                                                                                                       Gate level Simulation / Formal
       Design Architecture
                                                                                                                       Verification


                                                                                                                       Technical Support

       Applicable to high cost locations like Israel, UK, France

Source: Primary Interviews,, Zinnov Research and Analysis                                                                                                      12
Total product ownership seldom occurs in low cost offshoring locations, major
     focus is on downstream activities such as development and testing
                                                                                                         Activity heat map:       Low                   High




        Conceptualization                          Design                         Development                          Testing


       Concept Definition                          Feature Definition             Re-Engineering & Migration           Validation & Physical Checks


       Concept Evaluation                          Project Planning               Program Management                   Functional Verification


       Prototype Design/                           Requirement Gathering &
                                                                                  Project Management                   Unit/ Interface Testing
       Architecture                                Analysis


       Technology Evaluation                       Software Architecture          RTL Verification                     Component/ Feature Testing


                                                   High-Level Design of product   Synthesis
       Prototype Development                                                                                           Regression Testing
                                                   concept


       Prototype Validation                        RTL Coding                     Back-end Integration                 Testing Automation


                                                                                                                       Product Validation/
       Design Specifications                                                                                           Acceptance

                                                                                                                       Gate level Simulation / Formal
       Design Architecture
                                                                                                                       Verification


                                                                                                                       Technical Support

       Applicable to low cost locations like Bangalore, Hyderabad, Shanghai, Beijing

Source: Primary Interviews,, Zinnov Research and Analysis                                                                                                      13
Agenda




         1     Semiconductor R&D hubs – an overview


         2     Location insights


                 1       Bangalore & Hyderabad, India   5    Seoul, Korea

                 2       Shanghai & Beijing, China      6    Haifa & Ra’anana, Israel

                 3       Nice, France                   7    Taipei, Taiwan

                 4       Cambridge, UK                  8    Singapore




    Note: This Preview report has summary of only the top 10 cities
                                                                                        14
Indian government is incentivizing and funding the talent development for semiconductor
     industry to propel growth
                                                                                                                                              Bangalore & Hyderabad

                                                   Indian semiconductor design industry comprises of VLSI design, board design and embedded
             Bangalore &                            software companies
             Hyderabad,                            9 out of top 10 semiconductor companies have their presence in the region
                India                              India’s manufacturing index is low; it manufactures only 46% of the products consumed, so there’s
                                                    a greater opportunity for the industry

      Talent Pool & University ecosystem                                                       Government initiatives & incentives
                                                                                               Financial incentives
       25000                                            Number of MNCs present
                        117
                                                                                                10 year tax holiday equal to 100 percent of taxable profits to
       20000                                             MNC R&D headcount                       companies registered in India that carry on scientific R&D
                                            62
       15000                                                                                    Up to 150 percent deduction of R&D expenses incurred for companies
                                                                                                 engaged in electronic equipment manufacturing
       10000           20230
                                                                                                Special Incentive Package Scheme for setting up semicon fabs and
                                          13849                                                  other micro and nanotechnology manufacturing industries in India
         5000                                                   15
                                                              1907
                                                                                                Karnataka Fund for Semiconductor Excellence aimed at attracting
             0                                                                                   electronics and hardware companies to the state. The state has
                       India            Bangalore          Hyderabad                             committed to set up with a corpus of US$ 2.14 million to encourage
      Bangalore and Hyderabad together account for ~80% of the total                            R&D in chip design
       MNC talent pool for semiconductor R&D in India                                          Special programs
      Bangalore has ~75-90 colleges producing ~20,000 engineering                              National Semiconductor Policy (NSP) or Fab Policy was set up to
       graduates per year                                                                        become self-reliant in chip manufacturing and encourage global
      Competitive landscape                                                                      semiconductor companies to set up manufacturing plants in India
      All global top ten fabless design companies have India operations
      19 of the top 25 semiconductor companies have presence in India




Source: ISA Semiconductor Study; National semiconductor policy; Zinnov Research and Analysis                                                                          15
ITFM Talent Heat Map for semiconductor talent pool in Bangalore & Hyderabad, India
                                                                                                                                               Bangalore & Hyderabad

                                                                     ITFM Talent Heat Map – Bangalore & Hyderabad

                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city

                                                                                     Bangalore
      Conceptualization
      Design
      Development
      Verification &
      Testing
                                                                                     Hyderabad
      Conceptualization
      Design
      Development
      Verification &
      Testing

                                                                                                                           High         Moderate             Low            16
Source: Zinnov Research and Analysis
Beijing & Shanghai have a large Research & Development talent Pool across sectors
     which gives them a competitive advantage over other locations
                                                                                                                                                              Shanghai & Beijing

                                                   China is home to number of large semiconductor companies. Foreign companies dominate the
              Shanghai &                            landscape; a number of domestic firms have also gained in scale and glob al presence
                Beijing,                           Besides being a strategic market location, Shanghai & Beijing have a large R&D talent Pool across
                 China                              sectors which gives it a competitive advantage over other locations
                                                   China’s government played a key role in promoting R&D investment in the region

      Talent Pool & University ecosystem                                                          Government initiatives & incentives
                                                                                                   Financial incentives
                                                        MNC R&D headcount
       14000                                                                                        Companies incurring R&D expenses in the production of new
       12000                                                                                         technologies, products, or techniques may enjoy a 50 percent “super
       10000                                                                                         deduction” over and above actual expense deduction
        8000
        6000                                            13300                                       Taxation laws for semiconductor manufacturing sector allow a 5 year
        4000                                                                                         tax holiday involving full exemption from corporate income tax for first
        2000                4290                                                                     5 years, starting when the business becomes profitable
           0                                                                                        To promote the IC design industry, state-owned research institutes
                           Beijing                    Shanghai                                       were privatized and also private companies were provided financial
      Beijing houses 70 graduate and post graduate colleges. Two of the                             assistance to conduct R&D activities
       Chinese National Universities are based out of Beijing                                       IC manufacturers are exempt from paying import duties and 17% VAT
      Shanghai is a major center of higher education and research with                              on IC production equipment and machinery. They are also granted easy
       ~30 colleges and universities. 6 of the country’s prestigious                                 customs clearance
       universities are based out of Shanghai                                                      Technology park/ R&D cluster
      Competitive landscape                                                                         China has more than 100 “high-technology parks” scattered throughout
                                                                                                     the country. Relatively large and more concentrated clusters are
      China has more than 600 companies in semiconductor vertical,
                                                                                                     emerging in Zhangjiang, Suzhou and Beijing
       including 472 IC design enterprises
      Foreign companies dominate the semiconductor industry; some of
       the domestic players have also grown significantly and established
       global presence

Source: Institute for International Economics website; ISA Semiconductor Study; Primary Interviews with MNC subsidiaries and Software Parks; Zinnov Research and Analysis          17
ITFM Talent Heat Map for semiconductor talent pool in Shanghai & Beijing, China
                                                                                                                                                  Shanghai & Beijing

                                                                     ITFM Talent Heat Map – Shanghai & Beijing


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



      Conceptualization


      Design

      Development

      Verification &
      Testing



                                                                                                                              High          Moderate            Low


                                                                                                                                                                            18
Source: Zinnov Research and Analysis
Nice has a internationally famous technology park called Sophia Antipolis, which attracts
     R&D companies and research communities from around the world
                                                                                                                                                       Nice

                                                 Nice houses several companies in the field of electronics. A number of research institutes and
                  Nice,                           universities focused on semiconductor R&D are located in close proximity with these companies
                                                 This has helped the location turn into a key destination for the research and innovation
                 France


      Talent Pool & University ecosystem                                                       Government initiatives & incentives

      Sophia Antipolis is a major innovation hub southwest                                    Financial incentives
       of Nice, France and is home to ~1400 companies with R&D                                  Research Tax Credit: Public grant aimed at increasing companies'
       capacity who provide ~30,000 jobs                                                         competitiveness by backing their R&D efforts. The tax credit equals 30%
      There are more than 5,000 students in the Universities present in                         of the annual R&D expenditure (up to 100 million € of the expenditure)
       Sophia Antipolis                                                                          or 5% of annual R&D expenditure (over 100 million €)

      Sophia Antipolis also houses engineering schools for electronics                        Technology park/ R&D cluster
       and computer sciences which has helped build a rich pool of                              40% of companies in Sophia Antipolis technology park are active in
       engineering expertise over the years                                                      R&D and the area numbers around 4,000 Researchers in Companies
      In parallel, international schools are developing to meet the need                        and Research Institutes
       for a highly- qualified and bilingual workforce.
      Competitive landscape

      Most companies establishing in Sophia Antipolis, Nice (France)
       choose to place their R&D departments in the region to
       collaborate with other companies. One fourth of the activities are
       being run by international companies - most of them US based
      A leading semiconductor company designs & develops new
       architecture & processor cores and also new variants of existing
       cores
      Another leading company has set up an R&D center in Sophia
       Antipolis to develop platform for next-gen mobile devices focusing
       on GSM and upcoming mobile standards.
Source: “France, Doing Business 2011“ Doing Business website, www.doingbusiness.org/data/exploreeconomies/France; Zinnov Research and Analysis                         19
ITFM Talent Heat Map for semiconductor talent pool in Nice, France
                                                                                                                                                           Nice

                                                                     ITFM Talent Heat Map - Nice


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



      Conceptualization


      Design

      Development

      Verification &
      Testing



                                                                                                                              High          Moderate            Low


                                                                                                                                                                            20
Source: Zinnov Research and Analysis
The creation and support of the cluster in the Cambridge region “Silicon Fen” has led to
     the formulation of the well-established Semiconductor Industry in UK
                                                                                                                                                               Cambridge

                                                  Cambridge in East England has a healthy number of semiconductor design companies focused on
              Cambridge,                           device- and application-based markets
                                                  Oxford, Southampton and Surrey in Southeast England are focused on application engineering and
                 UK                                hardware design in the semiconductor ecosystem



      University ecosystem                                                                      Government initiatives & incentives

      Cambridge is the home to world famous ‘University of Cambridge’                          Financial incentives
       which has student population of about 18,000. It has produced 88                          R&D companies can claim a deduction on their taxable profits if they
       Noble prize winners                                                                        spend at least £10,000 annually on qualifying R&D activities
      The University is credited for the supply of competitive manpower                         While SMEs can claim 175%, large companies can claim 130% of
       that addresses the need of the semiconductor sector, which is                              qualifying expenditure
       highly knowledge-intensive                                                                                                          1990-Present Day
                                                                                                Technology park/ R&D cluster
      Also of importance is Cambridge Universities' liberal attitude to IP                                                                Established Ecosystem
       rights which has allowed the 'spinning off' of companies from                             “Silicon Fen” Cambridge, UK
       research                                                                                                                             250 active start-ups are
                                                                                                                        1980-90s            directly linked to the
      Competitive landscape                                                                                                                 Cambridge University
                                                                                                                      Growth & Innovation

      The creation and support of the cluster in the Cambridge region                                                       Cluster produces           Factors that helped
       “Silicon Fen” has led to the formulation of the well-established                            1970s                     more patents per           establish the
       Semiconductor Industry in the UK                                                                                      capita than the UK         semiconductor
                                                                                                  Early Years                average                    ecosystem
      A top semiconductor major focuses on development of DSP                                                                                          o Proximity to
       architectures and compilers and embedded software                                        Cambridge Science            Cluster grows                University
      Another specializes in technologies, tools and design for mobile UI
                                                                                                Park set up in 1970          rapidly with the           o Collaboration with
                                                                                                                             emergence of                 University and other
       with engineering and design teams working on embedded mobile                             Large number of              computer services            R&D organizations
       handset and server-side technologies                                                     high-technology spin-        firms and                  o Easy access to
                                                                                                offs from University         companies                    finance through VC
                                                                                                of Cambridge                 involved in R&D              firms

Source: ISA Semiconductor Study; http://www.cambridge.gov.uk/ccm/content/business; Department for Business Innovation and Skills, UK; Zinnov Research and Analysis               21
ITFM Talent Heat Map for semiconductor talent pool in Cambridge, UK
                                                                                                                                                       Cambridge

                                                                     ITFM Talent Heat Map - Cambridge


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



      Conceptualization


      Design

      Development

      Verification &
      Testing



                                                                                                                              High          Moderate            Low


                                                                                                                                                                            22
Source: Zinnov Research and Analysis
Seoul focuses on both financial incentives & clusters to support its semiconductor
     industry
                                                                                                                                                          Seoul

                                                  S. Korean Semiconductor industry is anticipated to be worth around US$ 40 Bn by 2013
                  Seoul,                          Factors that have helped the country to emerge as a global semiconductor leader include strong
                                                   government support, aggressive industry investments and rising exports
                 S. Korea                         Investment of US$ 54 Mn until 2015 in analog chip industry will also help boost the country’s
                                                   semiconductor market

      Talent Pool & University ecosystem                                                         Government initiatives & incentives

      In 2010, Seoul had more than 17,000 employees working in                                  Financial incentives
       semiconductor and related sector                                                           Tax Support for Tech. Firms
                                                                                                          Corporate Tax Reduction
      Seoul houses around 20 Universities , including Korea’s four most                                  Local Tax (acquisition/registration/property tax) reduction or
       prestigious Universities                                                                             Exemption
      Korea Advanced Institute of Science & Technology has an                                            Exemption of Customs Duties etc.
       excellent research infrastructure and collaborations with leading                                  Tax Support for Dividends
       semiconductor industry giants                                                              In cases where foreign investment satisfies certain conditions, the
                                                                                                   central and local governments of Korea provide cash grant for the
                                                                                                   construction of a new factory, technology investment etc

      Competitive landscape                                                                       Foreign investment zones, free trade zones, and free economic zones in
                                                                                                   S. Korea offer investment environment favorable to foreign investors
      S. Korea has about 370 large, small and mid sized semiconductor
                                                                                                 Technology park/ R&D cluster
       companies , which includes 150 fabless companies
                                                                                                  Seoul Digital Industrial Complex is the largest IT complex in the country
                                                                                                   with the total number of employees hired by its resident companies
                                                                                                   exceeding 100,000
                                                                                                          The complex attracts diverse technology companies each of
                                                                                                           which are eligible for 100 percent exemption from acquisition
                                                                                                           and registration taxes and a 5 year reduction of property tax
                                                                                                  Magok District: The hi-tech industrial complex (total area of
                                                                                                   742,442m2) aims to become a global R&D hub with links to industry
                                                                                                   clusters

Source: International Finance Centre Seoul; KOTRA (Korea Trade Promotion Corporation); ISA Semiconductor Study; Zinnov Research and Analysis                                23
ITFM Talent Heat Map for semiconductor talent pool in Seoul, South Korea
                                                                                                                                                          Seoul

                                                                     ITFM Talent Heat Map - Seoul


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



      Conceptualization


      Design

      Development

      Verification &
      Testing



                                                                                                                              High          Moderate            Low


                                                                                                                                                                            24
Source: Zinnov Research and Analysis
Israel supports the ecosystem for semiconductor industry through grants, funds &
      technological incubators
                                                                                                                                             Haifa & Ra’anana

                                                    Israel's fabless sector is third only to the USA and Taiwan
                 Haifa &                            Israel has over 150 fabless semiconductor companies, R&D facilities and design centers, of which
                Ra’anana,                            over 30 are foreign corporations
                  Israel                            Between 1995 and 2002, almost 150 Israeli companies in the semiconductor industry were
                                                     acquired by overseas concerns

      Talent Pool & University ecosystem                                                Government initiatives & incentives

      ~7000 engineers are employed in the semiconductor domain in                      Financial incentives
       Israel                                                                            Foreign investors in Israel are eligible for a ten-percent corporate
                                                                                          income tax rate, and if located in central Israel, can also be eligible for
      Close to 10% of the world's electronic designers make their home                   two-year full exemption from that tax
       in Israel. Over 60% of all electronics industry employees in Israel
       are highly educated engineers and scientists.                                     Funds & Grants
      Israel Universities are among top 100 worldwide in Science &                             Qualified R&D plan makes the company eligible for grants
       Engineering. The world's first nano-wire (3 times thinner than                            ranging between 20% and 50% of R&D expenses
       those used in microchips) was created at the Technion-Israel Inst.                       The Heznek-Seed Fund through which the government matches
       of Tech.                                                                                  an investor’s investment in the share capital of a seed
                                                                                                 company, later giving the investors an option to purchase the
      Number of engineering graduates from Israel annually: 8,000                               government shares
      The country has the highest number of engineers per capita (135                          Funding of R&D projects from the Office of the Chief Scientist
       per 10,000, compared to 85 in the US). Its researchers publish the                       Employment Grants for R&D Centers
       highest number of scientific papers in international journals (110               Special programs
       for every 10,000 people)                                                          Magneton and Noffar programs: Support for applied academic
                                                                                          research in all areas and especially in biotechnology and
      Competitive landscape
                                                                                          nanotechnology
      Israel also has over 150 fabless semiconductor companies, R&D                             promote the transfer of the technology to the industry.
       facilities and design centers                                                             grants are up to 66% and 90% of the approved expenses
      The entry point for most multinational majors has been via active                 Technological Incubators provide a framework and support (including
       acquisition of startups or smaller companies at Israel                             grants of up to 85% of approved expenses) for nascent companies to
                                                                                          develop innovative technologies

Source: israel.gov.il; ISA Semiconductor Study; Zinnov Research and Analysis                                                                                            25
ITFM Talent Heat Map for semiconductor talent pool in Haifa & Ra’anana, Israel
                                                                                                                                                   Haifa & Ra’anana

                                                                     ITFM Talent Heat Map - Haifa & Ra’anana


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



      Conceptualization


      Design

      Development

      Verification &
      Testing



                                                                                                                              High          Moderate            Low


                                                                                                                                                                            26
Source: Zinnov Research and Analysis
Taipei has seen rapid economic development and has become an important global city in
     the production of high technology
                                                                                                                                              Taipei

                                                Taiwan is a leading exporter of electronic goods. High demand from overseas countries for devices
                 Taipei,                         such as Smartphones, 3G enabled handsets and Netbooks is supporting growth of the
                                                 semiconductor industry
                 Taiwan                         The government has played a key role in the growth of the semiconductor industry



      University ecosystem                                                            Government initiatives & incentives

      Taipei has around twenty Universities, including Taiwan’s top five             Financial incentives
       Technology Universities.                                                        Hi-tech industry provided 5 year tax holiday on corporate income,
      Engineering degrees account for over a quarter of the bachelor                   applicable to entire income for new company, and on incremental
       degrees awarded in Taiwan.                                                       income from new construction/expansion for pre-existing companies

      In 2009, enrollment in Electronics Engineering accounted for about              Products manufactured for export in designated science parks also
       18% of the total enrollment in Engineering (30,255 students)                     provided zero tax exemption from import duties & certain other taxes

      Taiwan planned to increase its university faculty staff by 85                   A company may take a 35 tax percent credit for R&D expenses and
       positions annually for three years, for a total of 255 new university            personnel training against income tax payable for 5 consecutive years
       instructors specializing in VLSI education                                     Special programs
                                                                                       Si-Soft Project to promote Taiwanese human resources in
                                                                                        microelectronics; includes opening a semiconductor “design park” and
     Competitive landscape
                                                                                        invest roughly $250 mn in R&D funds in optoelectronics, embedded
      Taiwan, which has adopted a cluster-based approach, is home to a                 processor design, and wireless technology
       number of design companies, as it has a well-developed                         Technology park/ R&D cluster
       semiconductor ecosystem with fabrication, assembly testing and                  Hsin-chu Science-based Industrial Park following the model of Silicon
       packaging (ATP) units, along with design units                                   Valley in the US to create an environment conducive to the
      Taiwan’s semiconductor industry companies mainly are distributed                 development of a high-technology industry (including semiconductors)
       in Hsinchu and the Great Taipei                                                         Proximity to two of Taiwan’s oldest universities gives the park
                                                                                                 advantages of skilled labor supply & low training costs
      Taipei houses more than 90 IC design companies.
                                                                                       Institutions such as Industrial Technology Research Institute
                                                                                        collaborate with private-sector companies to build research
                                                                                        competitiveness
Source: Taipei City Government; Department of Economic Development; Zinnov Research                                                                               27
ITFM Talent Heat Map for semiconductor talent pool in Taipei, Taiwan
                                                                                                                                                          Taipei

                                                                   ITFM Talent Heat Map - Taipei


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



       Conceptualization


       Design

       Development

       Verification &
       Testing



                                                                                                                             High           Moderate           Low


                                                                                                                                                                            28
Source: Zinnov Research and Analysis
Singapore government Economic Development Board (EDB) has made major investments
     to nurture talent ecosystem specifically for its semiconductor industry
                                                                                                                                                    Singapore

                                                Singapore's semiconductor industry started more than 30 years ago when some leading MNCs set
                                                 up their plants in the region
               Singapore                        Today, Singapore is home to more than 40 multinational and indigenous semiconductor companies
                                                 spanning the full semiconductor value chain of activities
                                                Semiconductor Industry accounts for 48 percent of the total Electronics output

      Talent Pool & University ecosystem                                                      Government initiatives & incentives

      Semiconductor industry employs more than 40,000 people                                 Financial incentives
       currently and grew by 64% in 2010                                                       Singapore grants a 5-year tax exemption on foreign-sourced royalties
      Engineering degrees account for 30% of bachelor degrees.                                 or income used for R&D in Singapore under its Research and
       Singapore has around 3 major Research Institutes and 3                                   Development and Intellectual Property Management Hub program
       Universities in Microelectronics and IC Design area                                     Firms qualifying as “pioneer companies” may be exempt from income
      Singapore govt. Economic Development Board (EDB) has invested                            tax on qualifying income for up to 15 years, and thereafter for another
       $8 million to encourage undergraduates to specialize in                                  five years may enjoy a rate as low as five percent pursuant to a
       semiconductor wafer fabrication, with the objective of training 900                      development and expansion incentive
       engineers                                                                               Research Incentive Scheme for Companies (RISC): Co-funding to
                                                                                                support the set-up of R&D centers, and/or the development of in-house
                                                                                                R&D capabilities in strategic areas of technology supportable project
     Competitive landscape                                                                      costs

      One of the largest suppliers of fabless chips has a test center which                   Initiatives in New Technology (INTECH): Co-funding to support the
       carries out design verification and failure analysis for its new                         manpower development in the application of new technologies,
       products and technologies designed in its design centers in India,                       industrial R&D and professional know-how
       China, Taiwan, and Korea.                                                              Technology park/ R&D cluster
      Over 20 IC design and system design companies in Singapore                              Fab Parks: With a first-class physical infrastructure comprising of 4
       formed Microelectronics IC Design And System Association                                 specialized wafer fab parks that occupy ~200 hectares, and end-to-end
       (MIDAS), to develop an environment where members interact &                              semiconductor R&D capabilities from IC design and process
       feed off each other                                                                      enhancement to embedded software and system development



Source: Singapore Economic Development Board; ISA Semiconductor Study; Zinnov Research and Analysis                                                                       29
ITFM Talent Heat Map for semiconductor talent pool in Singapore
                                                                                                                                                       Singapore

                                                                     ITFM Talent Heat Map - Singapore


                                            Installed Base                Technology Depth                 Fresh Graduate                        Mobility
                                       •   Availability of well trained   •   Technology depth of      •   Availability of university   •   Ecosystem to support
                                           suitable talent to perform         talent to perform            ecosystem and fresh              mobility of talent from other
                                           the type of work defined.          activities with at par       talent. This indicates the       cities within the country,
                                                                              productivity to HQ and       pipeline of fresh talent         other global cities
                                                                              under full ownership         that can be tapped into          (Expatriates)
                                                                              (minimum guidance)           the city



      Conceptualization


      Design

      Development

      Verification &
      Testing



                                                                                                                              High          Moderate            Low


                                                                                                                                                                            30
Source: Zinnov Research and Analysis
Additional Information


  The full report provides information on global semiconductor hubs which include the following cities
       Taipei, Taiwan
       Seoul, South Korea
       Nice, France
       Singapore
       Cambridge, UK
       Haifa, Israel
       Tel Aviv, Israel
       Beijing, China
       Shanghai, China
       Bangalore, India
       Hyderabad, India
       Dallas, US
       San Jose, US
       Santa Clara, US
       Dresden, Germany


  Full report on Semiconductor hotspots can be accessed at Zinnov ‘s Global
   Location & Talent Pool Portal.
        Sign up today for a free trial account http://zinnov.com/US/demo_signup.php
        Or, email us at info@zinnov.com




                                                                                                          31
Zinnov LLC


4701 Patrick Henry Dr.
Building 7
Santa Clara
CA – 95054
Phone: +1-408-716-8432

21, Waterway Ave,
                                                        Thank You
Suite 300
The Woodlands
TX – 77380
Phone: +1-281-362-2773

69 "Prathiba Complex", 4th 'A'
Cross, Koramangala Ind. Layout
5th Block, Koramangala
Bangalore – 560095
Phone: +91-80-41127925/6

11, First Floor,
Paras Downtown Center,
                                              info@zinnov.com
Golf Course Road, Sector 53,                  www.zinnov.com
Gurgaon – 122002
Phone: +91-124- 4378211/13


                                                       @zinnov

                                                                    Zinnov LLC ( Confidential)   32

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Semiconductor Hubs for Research & Innovation

  • 1. Semiconductor Hubs for Research & Innovation Overview of the report This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov
  • 2. Scope  The report aims to analyze the leading global hubs for semiconductor research and innovation talent and ecosystem  A structured mechanism was used to identify the leading destinations for globalizing semiconductor R&D. The Cambridge, Beijing, China Seoul, S. Korea report provides key insights UK on the identified locations Shanghai, Nice, France Hyderabad, (highlighted in the map) India China including Haifa & Ra’anana, Taipei, Israel Taiwan  University Ecosystem  Competitive landscape Bangalore, India  Government initiatives and incentives Singapore  Financial incentives  Special programs  Infrastructure investment  Talent Heat map  Installed Base  Technology Depth  Fresh Graduate  Mobility Note: This Preview report has summary of only the top 10 cities 2
  • 3. Agenda 1 Semiconductor R&D hubs – an overview 2 Location insights 3
  • 4. A structured mechanism was used to identify the top locations for semiconductor R&D Ecosystem analysis on 30 global cities with semiconductor R&D Focus Benchmark 15 Cities talent 1. Presence of semiconductor MNC firms 2. Competitive domestic players in the Cities semiconductor market 3. Large base of skilled manpower Taipei, Taiwan Shanghai, China 4. Vibrant startup community 5. Strong university ecosystem Seoul, South Korea Bangalore, India 6. Supportive government policies Nice, France Hyderabad, India Singapore Dallas, US Cambridge, UK San Jose, US Haifa, Israel Santa Clara, US Tel Aviv, Israel Dresden, Germany Beijing, China
  • 5. Asian and European cities emerged as the most suitable destinations for semiconductor related work Top destinations for semiconductor research and innovation Dresden, Germany Seoul, S. Korea Cambridge, UK Beijing, China Nice, France Shanghai, China Dallas, US Hyderabad, India Tel Aviv, Israel San Jose, US Haifa & Ra’anana, Israel Taipei, Taiwan Santa Clara, US Bangalore, India Singapore Source: Zinnov Database, Zinnov Research & Analysis 5
  • 6. Eight cities have been identified to be fast emerging as next preferred locations for semiconductor offshoring Emerging Locations for Semiconductor Offshoring Dublin, Ireland St. Petersburg, Russia Moscow, Russia Bristol, UK Ramat Jan, Yakum, Israel Clark & Baguio, Philippines Source: Zinnov Database, Zinnov Analysis 6
  • 7. Though global sourcing began primarily in the 1990s, the most active period in the globalization of semiconductor R&D was in the years 2000 - 2005 Evolution Pattern of leading semiconductor MNCs High growth Medium growth Bangalore, India 1 1 1 4 9 9 9 Taipei, Taiwan 2 6 6 Shanghai, China 3 4 4 Beijing, China 2 5 5 5 Seoul, South Korea 2 4 4 Nice, France 1 2 3 3 Singapore 1 3 3 3 Cambridge, U.K. 1 1 1 2 2 2 Hyderabad, India 1 2 2 Haifa, Israel 1 1 1 2 2 2 2 2 Ra’anana, Israel 1 1 1 2 3 1980 1985 1990 1995 2000 2005 2010 2011 Year of Establishment n Indicates number of centers 7 Source: Zinnov Database, Zinnov Research & Analysis
  • 8. Cities in India and China witnessed the most activity during globalization as costs in these locations were competitive, and continue to be so, when compared to other locations Average Cost per FTE across selected global locations 100 85 88 75 80 80 65 68 65 68 55 60 55 60 50 55 58 50 55 58 USD in ‘000s 60 45 45 40 20 0 Shanghai Beijing Bangalore Hyderabad Taipei 160 25 Percentile 50 Percentile 75 Percentile 90 Percentile 145 148 140 135 140 115 118 115 118 112 117 120 105 110 105 110 105 98 100 USD in ‘000s 80 68 55 60 65 60 40 20 0 Seoul Haifa Ra'anana Nice Cambridge Source: Zinnov Database, Zinnov Research and Analysis 8
  • 9. Predominant activity in low cost locations in India & China is development & testing; in comparison, high cost locations like Israel & UK have a higher share of conceptualization Average Percentage Split of Work by Functions across Locations Bangalore 5.00% 30.00% 35.00% 30.00% Taipei 10.00% 35.00% 30.00% 25.00% Shanghai 5.00% 30.00% 35.00% 30.00% Beijing 5.00% 30.00% 35.00% 30.00% Seoul 10.00% 30.00% 30.00% 30.00% Nice 15.00% 25.00% 30.00% 20.00% Cambridge 15.00% 25.00% 30.00% 20.00% Hyderabad 5.00% 30.0% 35.0% 30.0% Haifa 20.00% 35.0% 35.0% 10.0% Ra'anana 20.00% 35.0% 35.0% 10.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Conceptualization Design Development Testing Source: Primary Interviews, Zinnov Research and Analysis 9
  • 10. The depth of technical leadership in India and China centers is low and this impacts their ability to contribute at the higher end of the product value chain R&D Employees Experience Distribution 2% 4% 4% 28% 13% 8% 18% 13% 37% 38% 35% 44% 14% 32% 10% Head Quarters India China 0-3 Years 4-6 Years 7-10 Years 11-15 Years 15+ Years Source: Primary Interviews, Zinnov Research and Analysis 10
  • 11. Head Quarters (HQ) has end-to-end product ownership with main focus on upstream activities such as conceptualization and design Activity heat map: Low High Conceptualization Design Development Testing Concept Definition Feature Definition Re-Engineering & Migration Validation & Physical Checks Concept Evaluation Project Planning Program Management Functional Verification Prototype Design/ Requirement Gathering & Project Management Unit/ Interface Testing Architecture Analysis Technology Evaluation Software Architecture RTL Verification Component/ Feature Testing High-Level Design of product Synthesis Prototype Development Regression Testing concept Prototype Validation RTL Coding Back-end Integration Testing Automation Product Validation/ Design Specifications Acceptance Gate level Simulation / Formal Design Architecture Verification Technical Support Source: Primary Interviews,, Zinnov Research and Analysis 11
  • 12. A few high cost offshoring locations have total product ownership and serve as a design center along with development and testing Activity heat map: Low High Conceptualization Design Development Testing Concept Definition Feature Definition Re-Engineering & Migration Validation & Physical Checks Concept Evaluation Project Planning Program Management Functional Verification Prototype Design/ Requirement Gathering & Project Management Unit/ Interface Testing Architecture Analysis Technology Evaluation Software Architecture RTL Verification Component/ Feature Testing High-Level Design of product Synthesis Prototype Development Regression Testing concept Prototype Validation RTL Coding Back-end Integration Testing Automation Product Validation/ Design Specifications Acceptance Gate level Simulation / Formal Design Architecture Verification Technical Support Applicable to high cost locations like Israel, UK, France Source: Primary Interviews,, Zinnov Research and Analysis 12
  • 13. Total product ownership seldom occurs in low cost offshoring locations, major focus is on downstream activities such as development and testing Activity heat map: Low High Conceptualization Design Development Testing Concept Definition Feature Definition Re-Engineering & Migration Validation & Physical Checks Concept Evaluation Project Planning Program Management Functional Verification Prototype Design/ Requirement Gathering & Project Management Unit/ Interface Testing Architecture Analysis Technology Evaluation Software Architecture RTL Verification Component/ Feature Testing High-Level Design of product Synthesis Prototype Development Regression Testing concept Prototype Validation RTL Coding Back-end Integration Testing Automation Product Validation/ Design Specifications Acceptance Gate level Simulation / Formal Design Architecture Verification Technical Support Applicable to low cost locations like Bangalore, Hyderabad, Shanghai, Beijing Source: Primary Interviews,, Zinnov Research and Analysis 13
  • 14. Agenda 1 Semiconductor R&D hubs – an overview 2 Location insights 1 Bangalore & Hyderabad, India 5 Seoul, Korea 2 Shanghai & Beijing, China 6 Haifa & Ra’anana, Israel 3 Nice, France 7 Taipei, Taiwan 4 Cambridge, UK 8 Singapore Note: This Preview report has summary of only the top 10 cities 14
  • 15. Indian government is incentivizing and funding the talent development for semiconductor industry to propel growth Bangalore & Hyderabad  Indian semiconductor design industry comprises of VLSI design, board design and embedded Bangalore & software companies Hyderabad,  9 out of top 10 semiconductor companies have their presence in the region India  India’s manufacturing index is low; it manufactures only 46% of the products consumed, so there’s a greater opportunity for the industry Talent Pool & University ecosystem Government initiatives & incentives Financial incentives 25000 Number of MNCs present 117  10 year tax holiday equal to 100 percent of taxable profits to 20000 MNC R&D headcount companies registered in India that carry on scientific R&D 62 15000  Up to 150 percent deduction of R&D expenses incurred for companies engaged in electronic equipment manufacturing 10000 20230  Special Incentive Package Scheme for setting up semicon fabs and 13849 other micro and nanotechnology manufacturing industries in India 5000 15 1907  Karnataka Fund for Semiconductor Excellence aimed at attracting 0 electronics and hardware companies to the state. The state has India Bangalore Hyderabad committed to set up with a corpus of US$ 2.14 million to encourage  Bangalore and Hyderabad together account for ~80% of the total R&D in chip design MNC talent pool for semiconductor R&D in India Special programs  Bangalore has ~75-90 colleges producing ~20,000 engineering  National Semiconductor Policy (NSP) or Fab Policy was set up to graduates per year become self-reliant in chip manufacturing and encourage global Competitive landscape semiconductor companies to set up manufacturing plants in India  All global top ten fabless design companies have India operations  19 of the top 25 semiconductor companies have presence in India Source: ISA Semiconductor Study; National semiconductor policy; Zinnov Research and Analysis 15
  • 16. ITFM Talent Heat Map for semiconductor talent pool in Bangalore & Hyderabad, India Bangalore & Hyderabad ITFM Talent Heat Map – Bangalore & Hyderabad Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Bangalore Conceptualization Design Development Verification & Testing Hyderabad Conceptualization Design Development Verification & Testing High Moderate Low 16 Source: Zinnov Research and Analysis
  • 17. Beijing & Shanghai have a large Research & Development talent Pool across sectors which gives them a competitive advantage over other locations Shanghai & Beijing  China is home to number of large semiconductor companies. Foreign companies dominate the Shanghai & landscape; a number of domestic firms have also gained in scale and glob al presence Beijing,  Besides being a strategic market location, Shanghai & Beijing have a large R&D talent Pool across China sectors which gives it a competitive advantage over other locations  China’s government played a key role in promoting R&D investment in the region Talent Pool & University ecosystem Government initiatives & incentives Financial incentives MNC R&D headcount 14000  Companies incurring R&D expenses in the production of new 12000 technologies, products, or techniques may enjoy a 50 percent “super 10000 deduction” over and above actual expense deduction 8000 6000 13300  Taxation laws for semiconductor manufacturing sector allow a 5 year 4000 tax holiday involving full exemption from corporate income tax for first 2000 4290 5 years, starting when the business becomes profitable 0  To promote the IC design industry, state-owned research institutes Beijing Shanghai were privatized and also private companies were provided financial  Beijing houses 70 graduate and post graduate colleges. Two of the assistance to conduct R&D activities Chinese National Universities are based out of Beijing  IC manufacturers are exempt from paying import duties and 17% VAT  Shanghai is a major center of higher education and research with on IC production equipment and machinery. They are also granted easy ~30 colleges and universities. 6 of the country’s prestigious customs clearance universities are based out of Shanghai Technology park/ R&D cluster Competitive landscape  China has more than 100 “high-technology parks” scattered throughout the country. Relatively large and more concentrated clusters are  China has more than 600 companies in semiconductor vertical, emerging in Zhangjiang, Suzhou and Beijing including 472 IC design enterprises  Foreign companies dominate the semiconductor industry; some of the domestic players have also grown significantly and established global presence Source: Institute for International Economics website; ISA Semiconductor Study; Primary Interviews with MNC subsidiaries and Software Parks; Zinnov Research and Analysis 17
  • 18. ITFM Talent Heat Map for semiconductor talent pool in Shanghai & Beijing, China Shanghai & Beijing ITFM Talent Heat Map – Shanghai & Beijing Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 18 Source: Zinnov Research and Analysis
  • 19. Nice has a internationally famous technology park called Sophia Antipolis, which attracts R&D companies and research communities from around the world Nice  Nice houses several companies in the field of electronics. A number of research institutes and Nice, universities focused on semiconductor R&D are located in close proximity with these companies  This has helped the location turn into a key destination for the research and innovation France Talent Pool & University ecosystem Government initiatives & incentives  Sophia Antipolis is a major innovation hub southwest Financial incentives of Nice, France and is home to ~1400 companies with R&D  Research Tax Credit: Public grant aimed at increasing companies' capacity who provide ~30,000 jobs competitiveness by backing their R&D efforts. The tax credit equals 30%  There are more than 5,000 students in the Universities present in of the annual R&D expenditure (up to 100 million € of the expenditure) Sophia Antipolis or 5% of annual R&D expenditure (over 100 million €)  Sophia Antipolis also houses engineering schools for electronics Technology park/ R&D cluster and computer sciences which has helped build a rich pool of  40% of companies in Sophia Antipolis technology park are active in engineering expertise over the years R&D and the area numbers around 4,000 Researchers in Companies  In parallel, international schools are developing to meet the need and Research Institutes for a highly- qualified and bilingual workforce. Competitive landscape  Most companies establishing in Sophia Antipolis, Nice (France) choose to place their R&D departments in the region to collaborate with other companies. One fourth of the activities are being run by international companies - most of them US based  A leading semiconductor company designs & develops new architecture & processor cores and also new variants of existing cores  Another leading company has set up an R&D center in Sophia Antipolis to develop platform for next-gen mobile devices focusing on GSM and upcoming mobile standards. Source: “France, Doing Business 2011“ Doing Business website, www.doingbusiness.org/data/exploreeconomies/France; Zinnov Research and Analysis 19
  • 20. ITFM Talent Heat Map for semiconductor talent pool in Nice, France Nice ITFM Talent Heat Map - Nice Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 20 Source: Zinnov Research and Analysis
  • 21. The creation and support of the cluster in the Cambridge region “Silicon Fen” has led to the formulation of the well-established Semiconductor Industry in UK Cambridge  Cambridge in East England has a healthy number of semiconductor design companies focused on Cambridge, device- and application-based markets  Oxford, Southampton and Surrey in Southeast England are focused on application engineering and UK hardware design in the semiconductor ecosystem University ecosystem Government initiatives & incentives  Cambridge is the home to world famous ‘University of Cambridge’ Financial incentives which has student population of about 18,000. It has produced 88  R&D companies can claim a deduction on their taxable profits if they Noble prize winners spend at least £10,000 annually on qualifying R&D activities  The University is credited for the supply of competitive manpower  While SMEs can claim 175%, large companies can claim 130% of that addresses the need of the semiconductor sector, which is qualifying expenditure highly knowledge-intensive 1990-Present Day Technology park/ R&D cluster  Also of importance is Cambridge Universities' liberal attitude to IP Established Ecosystem rights which has allowed the 'spinning off' of companies from “Silicon Fen” Cambridge, UK research 250 active start-ups are 1980-90s directly linked to the Competitive landscape Cambridge University Growth & Innovation  The creation and support of the cluster in the Cambridge region Cluster produces Factors that helped “Silicon Fen” has led to the formulation of the well-established 1970s more patents per establish the Semiconductor Industry in the UK capita than the UK semiconductor Early Years average ecosystem  A top semiconductor major focuses on development of DSP o Proximity to architectures and compilers and embedded software Cambridge Science Cluster grows University  Another specializes in technologies, tools and design for mobile UI Park set up in 1970 rapidly with the o Collaboration with emergence of University and other with engineering and design teams working on embedded mobile Large number of computer services R&D organizations handset and server-side technologies high-technology spin- firms and o Easy access to offs from University companies finance through VC of Cambridge involved in R&D firms Source: ISA Semiconductor Study; http://www.cambridge.gov.uk/ccm/content/business; Department for Business Innovation and Skills, UK; Zinnov Research and Analysis 21
  • 22. ITFM Talent Heat Map for semiconductor talent pool in Cambridge, UK Cambridge ITFM Talent Heat Map - Cambridge Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 22 Source: Zinnov Research and Analysis
  • 23. Seoul focuses on both financial incentives & clusters to support its semiconductor industry Seoul  S. Korean Semiconductor industry is anticipated to be worth around US$ 40 Bn by 2013 Seoul,  Factors that have helped the country to emerge as a global semiconductor leader include strong government support, aggressive industry investments and rising exports S. Korea  Investment of US$ 54 Mn until 2015 in analog chip industry will also help boost the country’s semiconductor market Talent Pool & University ecosystem Government initiatives & incentives  In 2010, Seoul had more than 17,000 employees working in Financial incentives semiconductor and related sector  Tax Support for Tech. Firms  Corporate Tax Reduction  Seoul houses around 20 Universities , including Korea’s four most  Local Tax (acquisition/registration/property tax) reduction or prestigious Universities Exemption  Korea Advanced Institute of Science & Technology has an  Exemption of Customs Duties etc. excellent research infrastructure and collaborations with leading  Tax Support for Dividends semiconductor industry giants  In cases where foreign investment satisfies certain conditions, the central and local governments of Korea provide cash grant for the construction of a new factory, technology investment etc Competitive landscape  Foreign investment zones, free trade zones, and free economic zones in S. Korea offer investment environment favorable to foreign investors  S. Korea has about 370 large, small and mid sized semiconductor Technology park/ R&D cluster companies , which includes 150 fabless companies  Seoul Digital Industrial Complex is the largest IT complex in the country with the total number of employees hired by its resident companies exceeding 100,000  The complex attracts diverse technology companies each of which are eligible for 100 percent exemption from acquisition and registration taxes and a 5 year reduction of property tax  Magok District: The hi-tech industrial complex (total area of 742,442m2) aims to become a global R&D hub with links to industry clusters Source: International Finance Centre Seoul; KOTRA (Korea Trade Promotion Corporation); ISA Semiconductor Study; Zinnov Research and Analysis 23
  • 24. ITFM Talent Heat Map for semiconductor talent pool in Seoul, South Korea Seoul ITFM Talent Heat Map - Seoul Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 24 Source: Zinnov Research and Analysis
  • 25. Israel supports the ecosystem for semiconductor industry through grants, funds & technological incubators Haifa & Ra’anana  Israel's fabless sector is third only to the USA and Taiwan Haifa &  Israel has over 150 fabless semiconductor companies, R&D facilities and design centers, of which Ra’anana, over 30 are foreign corporations Israel  Between 1995 and 2002, almost 150 Israeli companies in the semiconductor industry were acquired by overseas concerns Talent Pool & University ecosystem Government initiatives & incentives  ~7000 engineers are employed in the semiconductor domain in Financial incentives Israel  Foreign investors in Israel are eligible for a ten-percent corporate income tax rate, and if located in central Israel, can also be eligible for  Close to 10% of the world's electronic designers make their home two-year full exemption from that tax in Israel. Over 60% of all electronics industry employees in Israel are highly educated engineers and scientists.  Funds & Grants  Israel Universities are among top 100 worldwide in Science &  Qualified R&D plan makes the company eligible for grants Engineering. The world's first nano-wire (3 times thinner than ranging between 20% and 50% of R&D expenses those used in microchips) was created at the Technion-Israel Inst.  The Heznek-Seed Fund through which the government matches of Tech. an investor’s investment in the share capital of a seed company, later giving the investors an option to purchase the  Number of engineering graduates from Israel annually: 8,000 government shares  The country has the highest number of engineers per capita (135  Funding of R&D projects from the Office of the Chief Scientist per 10,000, compared to 85 in the US). Its researchers publish the  Employment Grants for R&D Centers highest number of scientific papers in international journals (110 Special programs for every 10,000 people)  Magneton and Noffar programs: Support for applied academic research in all areas and especially in biotechnology and Competitive landscape nanotechnology  Israel also has over 150 fabless semiconductor companies, R&D  promote the transfer of the technology to the industry. facilities and design centers  grants are up to 66% and 90% of the approved expenses  The entry point for most multinational majors has been via active  Technological Incubators provide a framework and support (including acquisition of startups or smaller companies at Israel grants of up to 85% of approved expenses) for nascent companies to develop innovative technologies Source: israel.gov.il; ISA Semiconductor Study; Zinnov Research and Analysis 25
  • 26. ITFM Talent Heat Map for semiconductor talent pool in Haifa & Ra’anana, Israel Haifa & Ra’anana ITFM Talent Heat Map - Haifa & Ra’anana Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 26 Source: Zinnov Research and Analysis
  • 27. Taipei has seen rapid economic development and has become an important global city in the production of high technology Taipei  Taiwan is a leading exporter of electronic goods. High demand from overseas countries for devices Taipei, such as Smartphones, 3G enabled handsets and Netbooks is supporting growth of the semiconductor industry Taiwan  The government has played a key role in the growth of the semiconductor industry University ecosystem Government initiatives & incentives  Taipei has around twenty Universities, including Taiwan’s top five Financial incentives Technology Universities.  Hi-tech industry provided 5 year tax holiday on corporate income,  Engineering degrees account for over a quarter of the bachelor applicable to entire income for new company, and on incremental degrees awarded in Taiwan. income from new construction/expansion for pre-existing companies  In 2009, enrollment in Electronics Engineering accounted for about  Products manufactured for export in designated science parks also 18% of the total enrollment in Engineering (30,255 students) provided zero tax exemption from import duties & certain other taxes  Taiwan planned to increase its university faculty staff by 85  A company may take a 35 tax percent credit for R&D expenses and positions annually for three years, for a total of 255 new university personnel training against income tax payable for 5 consecutive years instructors specializing in VLSI education Special programs  Si-Soft Project to promote Taiwanese human resources in microelectronics; includes opening a semiconductor “design park” and Competitive landscape invest roughly $250 mn in R&D funds in optoelectronics, embedded  Taiwan, which has adopted a cluster-based approach, is home to a processor design, and wireless technology number of design companies, as it has a well-developed Technology park/ R&D cluster semiconductor ecosystem with fabrication, assembly testing and  Hsin-chu Science-based Industrial Park following the model of Silicon packaging (ATP) units, along with design units Valley in the US to create an environment conducive to the  Taiwan’s semiconductor industry companies mainly are distributed development of a high-technology industry (including semiconductors) in Hsinchu and the Great Taipei  Proximity to two of Taiwan’s oldest universities gives the park advantages of skilled labor supply & low training costs  Taipei houses more than 90 IC design companies.  Institutions such as Industrial Technology Research Institute collaborate with private-sector companies to build research competitiveness Source: Taipei City Government; Department of Economic Development; Zinnov Research 27
  • 28. ITFM Talent Heat Map for semiconductor talent pool in Taipei, Taiwan Taipei ITFM Talent Heat Map - Taipei Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 28 Source: Zinnov Research and Analysis
  • 29. Singapore government Economic Development Board (EDB) has made major investments to nurture talent ecosystem specifically for its semiconductor industry Singapore  Singapore's semiconductor industry started more than 30 years ago when some leading MNCs set up their plants in the region Singapore  Today, Singapore is home to more than 40 multinational and indigenous semiconductor companies spanning the full semiconductor value chain of activities  Semiconductor Industry accounts for 48 percent of the total Electronics output Talent Pool & University ecosystem Government initiatives & incentives  Semiconductor industry employs more than 40,000 people Financial incentives currently and grew by 64% in 2010  Singapore grants a 5-year tax exemption on foreign-sourced royalties  Engineering degrees account for 30% of bachelor degrees. or income used for R&D in Singapore under its Research and Singapore has around 3 major Research Institutes and 3 Development and Intellectual Property Management Hub program Universities in Microelectronics and IC Design area  Firms qualifying as “pioneer companies” may be exempt from income  Singapore govt. Economic Development Board (EDB) has invested tax on qualifying income for up to 15 years, and thereafter for another $8 million to encourage undergraduates to specialize in five years may enjoy a rate as low as five percent pursuant to a semiconductor wafer fabrication, with the objective of training 900 development and expansion incentive engineers  Research Incentive Scheme for Companies (RISC): Co-funding to support the set-up of R&D centers, and/or the development of in-house R&D capabilities in strategic areas of technology supportable project Competitive landscape costs  One of the largest suppliers of fabless chips has a test center which  Initiatives in New Technology (INTECH): Co-funding to support the carries out design verification and failure analysis for its new manpower development in the application of new technologies, products and technologies designed in its design centers in India, industrial R&D and professional know-how China, Taiwan, and Korea. Technology park/ R&D cluster  Over 20 IC design and system design companies in Singapore  Fab Parks: With a first-class physical infrastructure comprising of 4 formed Microelectronics IC Design And System Association specialized wafer fab parks that occupy ~200 hectares, and end-to-end (MIDAS), to develop an environment where members interact & semiconductor R&D capabilities from IC design and process feed off each other enhancement to embedded software and system development Source: Singapore Economic Development Board; ISA Semiconductor Study; Zinnov Research and Analysis 29
  • 30. ITFM Talent Heat Map for semiconductor talent pool in Singapore Singapore ITFM Talent Heat Map - Singapore Installed Base Technology Depth Fresh Graduate Mobility • Availability of well trained • Technology depth of • Availability of university • Ecosystem to support suitable talent to perform talent to perform ecosystem and fresh mobility of talent from other the type of work defined. activities with at par talent. This indicates the cities within the country, productivity to HQ and pipeline of fresh talent other global cities under full ownership that can be tapped into (Expatriates) (minimum guidance) the city Conceptualization Design Development Verification & Testing High Moderate Low 30 Source: Zinnov Research and Analysis
  • 31. Additional Information  The full report provides information on global semiconductor hubs which include the following cities  Taipei, Taiwan  Seoul, South Korea  Nice, France  Singapore  Cambridge, UK  Haifa, Israel  Tel Aviv, Israel  Beijing, China  Shanghai, China  Bangalore, India  Hyderabad, India  Dallas, US  San Jose, US  Santa Clara, US  Dresden, Germany  Full report on Semiconductor hotspots can be accessed at Zinnov ‘s Global Location & Talent Pool Portal.  Sign up today for a free trial account http://zinnov.com/US/demo_signup.php  Or, email us at info@zinnov.com 31
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