Overview of MicroelectronicsMarket in RussiaAN INNOVATION DRIVEN ASSESSMENTSEMICON Russia June 2013© 2013 Frost & Sullivan...
2Innovation driven future world!As part of the TechVision psyche, we look at “technology cluster ↔ market ↔ trend” interpl...
3Technology Attractiveness Dashboard9 dimensions (cornerstone of technology selection) that eventually influence a technol...
4Top 50TechnologiesWebRegenerative MedicineNext-Gen SequencingBiomarkersPersonalized MedicineTargeted Drug DeliveryGenetic...
5Interesting signals associated with Top 50 TechnologiesIdentifying and evaluating macro/micro signals (past, present, for...
6Russian Microelectronics Market Overview –Worldwide & Russia
7Global Semiconductor Market Worth US$ 320.4 Billion in2012*EUROPE• After a brief slowdown, in2010 the Europeansemiconduct...
8Semiconductor Market in 2012* – SnapshotCOMPUTERSCOMMUNICATIONSCONSUMERTotal semiconductor revenue for 2012 stood at $320...
9Theopportunityfor Russia isdefined by …The right timinggiven the market’snormal demandcyclesThe RussianGovernment isadvoc...
10Microelectronics Capability Requirement for RussiaCapital andlandEffectivetransportation/ logisticsRobustPublic-PrivateF...
11Partner Evaluation Criterion✔ Current exposure in RussiaCompany’s presence in Russia, including non-microelectronics bus...
12Inputs into the Microelectronics Market in Russia1. We believe that there is an opportunity for Russia to be established...
13Russian MicroelectronicsMarket Survey 2013. Part I• Highlights and key findings
14Russian Microelectronics Market Insight(April – May 2013)Around 100 participantsfrom Russian and foreigncompaniesTechnic...
15Which segments have the best growth perspectives inthe next 3 years?Top 4segmentsSource: Frost & Sullivan.Processors (MC...
16Which industries will demonstrate the largest demand formicroelectronics products in the next three years?Other industri...
17What are the prospects of your company revenue growthin the next 3 years?10%18%27%45%0% 10% 20% 30% 40% 50%No change<10%...
18What are the main strategic priorities for your companyin the next 3 years?Source: Frost & Sullivan.DiversificationDevel...
19Microelectronic Market RestraintsRanked in Order of ImpactOther restraints noted• Lack of complex approach to government...
20What State measures are the most efficient for thedevelopment of microelectronics in Russia?Development of special clust...
21Key Emerging Technologies
22Memory Technologies – Industry ScenarioTechnologiesMagnetoresistiveRAMPhaseChangeMemoryFerroelectricMemoryNanotechnology...
23Compound Semiconductor – Technology Snapshot• Silicon MOSFETs have now approached a performance plateau, while cost of a...
24Waves of InnovationEvolution of technologies at different rates gives rise to various waves of innovation that impact in...
25Innovation Convergence Drives Solutions
26Our Presenter TodayAnkit A. ShuklaPractice Director,EuropeTechnical InsightsFrost & SullivanGlobalOxford, UKFunctional E...
27For Additional InformationAnkit A. ShuklaPractise Director, Technical Insights (Europe)P: +44 (0) 1865-398687ashukla@fro...
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Overview of Microelectronics Market in Russia

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Microelectronics is one of the most important sectors of the economy and industry, and its development is essential to support country competitiveness at the macroeconomic level. In recent years, Russia has paid special attention to the development of microelectronics from both the public and private sectors. The government and private companies have established extensive support programmes and proclaimed ambitious goals to support the industry. However, the opportunities and instruments that should drive the changes are not so obvious.

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  • Survey conducted by F&amp;S (mainly Moscow office) in April – May 2013. Participants – representatives and technical experts from Russian and foreign companies working in Russia. It’s just the first part, which allows to show some preliminary results and key findings, the second part will be presented by the end of the year and will be more broad and will cover more technological aspects.
  • Top 4 segments which respondents mentioned as the most interesting and perspective. Probably you can give some comments about this information and global trends.
  • As many of market players remain optimistic their main goals are to diversify their business and products and to go further developing new technologies.Cost optimization is not number one priority not because the cost structure is 100% efficient but due to the understanding that there is enough space at internal market to have a privilege to develop the business even without thinking about internal efficiency.New market/ segment penetration is related with significant investments, so market players prefer to stay within their comfort zone.
  • The Absolut majority of the market players (92%) noted that current government support measures are not enough. Tax incentives and assistance with expansion strategy are the most desirable measures of state support. Preferences for local producers and research and project financing are considered as important as well. For some reason the development of special clusters and economic zones is considered no so effective like the measures of direct support, which probably means that this policy still didn’t have a chance to show all its benefits for the market players. Comparing to the best global practices and the best global experience the efficiency of special clusters is considered a bit low. Long term examples of success stories, efficient partnership and JV with the leading foreign players as well as transparent and unified policy for all residents could be the best promotion and the tool to change some skepticism of the market.
  • Overview of Microelectronics Market in Russia

    1. 1. Overview of MicroelectronicsMarket in RussiaAN INNOVATION DRIVEN ASSESSMENTSEMICON Russia June 2013© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
    2. 2. 2Innovation driven future world!As part of the TechVision psyche, we look at “technology cluster ↔ market ↔ trend” interplay to evaluate andpick top 50 technologies (for a given year) from a larger pool of 140 or so technology capabilitiesHealthcareSocialTrendsInnovating to ZeroHealth,Wellness,&Well-BeingF&S’sTechnologyClustersF&S’sVerticalBusinessUnitsMega TrendsTechnologyCandidates
    3. 3. 3Technology Attractiveness Dashboard9 dimensions (cornerstone of technology selection) that eventually influence a technology to be a “marketshow stopper” rather than a “technology gimmick”Year of Impact Market Potential Global FootprintIP Intensity Funding Breadth of IndustriesMegatrend Impact Potential Points of Convergence Size of Innovation Ecosystem
    4. 4. 4Top 50TechnologiesWebRegenerative MedicineNext-Gen SequencingBiomarkersPersonalized MedicineTargeted Drug DeliveryGenetic CosmeticsAdvanced Energy StorageConcentrated Solar PowerWind PowerGrid Energy ManagementSuperconductorsWaste-to-EnergyAdvanced FiltrationSolid Waste TreatmentBiochemicalsDesalinationGeneral Illumination LEDsEnergy Efficient ProcessorsNext-Gen Non-Volatile MemorySmart Haptics & TouchFlexible ElectronicsOLED DisplaysCarbon FibersBiocompositesSuperhydrophobic CoatingsSmart PackagingLightweight CompositesPolymer ChameleonsAlternative FeedstocksNanocoatingsCBRNE DetectionEnergy HarvestingNanosensorsUbiquitous Wireless SensorRoll-to-Roll Manufacturing3D PrintingComposites ManufacturingMicromanufacturingRemote Patient MonitoringSurgical RobotsInterventional RadiologyNeuromodulation TechnologiesVirtualizationCloud ComputingBig Data AnalyticsSemantic SearchData VisualizationContext-Aware MobilityAugmented RealityIn-Memory ComputingInformation & Communication TechnologyHealth&WellnessSustainableEnergyClean&Green Environment MicroelectronicsMaterials & CoatingsSensors & ControlsMedical Device& ImagingTechnologyAdvancedManufacturing &Automation
    5. 5. 5Interesting signals associated with Top 50 TechnologiesIdentifying and evaluating macro/micro signals (past, present, forecasted) associated with the technologies iskey to understanding the true potential and their future impact on markets and industries$1.9 Tn over 5 years$104 Bn in 2012190k patents awarded overlast 3 yearsAverage impact across5 industries and3 MegaTrendsMarketPotentialPatentActivityFundingConvergence
    6. 6. 6Russian Microelectronics Market Overview –Worldwide & Russia
    7. 7. 7Global Semiconductor Market Worth US$ 320.4 Billion in2012*EUROPE• After a brief slowdown, in2010 the Europeansemiconductor marketexpanded by 27%, totallingUS$ 38.6 billionAMERICAS• Sales of semiconductors areconcentrated in the North America,particularly in the US• In 2011, North American semiconductormarket grew by 40.7%, the highestregional growth, reaching US$ 54.2billionASIA PACIFIC• The semiconductor market hasrisen by 35% amounting US$ 175.3billion• China’s demand for industrial andautomotive ICs was among the keygrowth driversJAPAN• Following a difficult 2009,the Japanese semiconductormarket amounted to US$49.0 billion in 2010, 21.1%year-on year growth17.2% of theworld market12.1% of theworld market15.3of theworld market54.7% of theworld market<1% of theworld marketRUSSIA• In 2012 the Russian semiconductor marketis expected to be valued at US$ 2.2 billion.With new initiatives and Mega Trends inthe global Industry and in its optimisticscenario, F&S forecast that by 2018 themarket could total US$9.9 billion*Source: World Semiconductor Trade Statistics, IC Insights, Frost &Sullivan analysisGlobal Semiconductor Market Size – Breakdown of Consumption by Region
    8. 8. 8Semiconductor Market in 2012* – SnapshotCOMPUTERSCOMMUNICATIONSCONSUMERTotal semiconductor revenue for 2012 stood at $320.4* billion*Note: Revenues mentioned here are market estimates
    9. 9. 9Theopportunityfor Russia isdefined by …The right timinggiven the market’snormal demandcyclesThe RussianGovernment isadvocating fullsupportThe ability to engagein a partnership toaddress weaknessesExperience with90nm tech providessolid foundationRussia could bestrategic hub forsupplyingmicroelectronicsGrowing demand formicroelectronics fromdeveloping industriesICTAutomotiveRailMedicaldevicesNavigationRFIDSmart gridsGlobalCEECISOthersOpportunity for Russia on the Global Microelectronics Stage
    10. 10. 10Microelectronics Capability Requirement for RussiaCapital andlandEffectivetransportation/ logisticsRobustPublic-PrivateFrameworkTechnical andManagerialCompetence Tax and TariffsTax and Tariffs• Semiconductor industry remainssensitive about various policy issues. TheGovernment must create the rightincentives for investment by revisiting itspolicy for tax and import/export duties, inorder to become competitive on a worldstage.• Creation of economic zones withpreferential treatment as Zelenograd orSkolkovo is a welcoming step forward.Capital and Land• Russia boasts no shortage of landmass for manufacturing expansionas opposed to, for example, Taiwanor South Korea – both countriesalso prone to earthquake impactsas a stability concern for theindustry.• Government’s support ofmicroelectronics development, webelieve, also signifies readiness toprovide capital funding.Robust Public-Private Framework• Globally, semiconductor industry has evolved due tosuccessful cooperation between public and privateinstitutions – governmental bodies, R&D institutes,business investors.• In particular, Russia must encourage and facilitatecommercialization of innovations by large number ofstart-ups and R&D centres in the country.Effective Transportation/ Logistics• Both semiconductor and electronicsmanufacturing rely heavily of effectivelogistics system – Russia isadvantageous on the cost side, howevera lot yet to be done in terms of efficiency.• On a flip side, advances inmicroelectronics can help solving someof the pressing issues in transportation(RFID tagging, satelite navigation, stolenvehicles tracking).Technical and ManagerialCompetence• Russian has good technicaleducation, with proper training inmicroelectronics its graduatescould become a potent drivingforce behind the industry growth.• More is to be done in terms ofdeveloping managerialcompetencies.
    11. 11. 11Partner Evaluation Criterion✔ Current exposure in RussiaCompany’s presence in Russia, including non-microelectronics businesses, in particular –availability of manufacturing capacities or R&D centres✔ Political and economic relationsMajor semiconductor corporations are the beacons of their homeland’s technological andeconomic prowess; cooperation with such firms usually involves senior government officials andevolves within a framework of wider intergovernmental relations. For example, Brazil’sengagement with Toshiba in the field of microelectronics was initiated at Brazil-Japan talks;Intel’s Chairman personally flew and met with Israeli Prime-Minister to discuss potentialinvestment into new fab.✔ Product focusRelevance of the company’s product portfolio to the domestic microelectronics demand inRussia is crucial. For example, partnering with a company which solely produces memory ICsor chipsets for mobile communications is less attractive due to lack of internal demand✔ Investment outlookThat is company’s on-going, large-scale investment projects elsewhere would makecommitment to a significant project in Russia less likely✔ Business model and strategyFor example, foundries are less attractive for knowledge sharing and technology transferagreements✔ OtherCollaboration history, experience/willingness to operate in the emerging markets’, pasttechnology transfer agreements, cooperation with government bodies
    12. 12. 12Inputs into the Microelectronics Market in Russia1. We believe that there is an opportunity for Russia to be established as amanufacturing hub in the global micro-electronics industry.2. Given the industry’s demand cycles and given the lead-time for Russia to movefrom planning to execution, there is a limited window-of-opportunity.3. There is a tendency for specialisation (fabless/ fab-lite vs. foundry), rather thanimplementation of an end-to-end (IDM) business model.4. Irrespective of the business model, countries wishing to be established as a globalhub need to develop a powerful value proposition based on an holistic ecosystem.5. For the strategy to be successful, partnerships at several levels are required – atechnology-focused approach is insufficient.Having a clear strategy based on these points PRIOR to engaging potential partners is critical.
    13. 13. 13Russian MicroelectronicsMarket Survey 2013. Part I• Highlights and key findings
    14. 14. 14Russian Microelectronics Market Insight(April – May 2013)Around 100 participantsfrom Russian and foreigncompaniesTechnical experts and top-level respondents
    15. 15. 15Which segments have the best growth perspectives inthe next 3 years?Top 4segmentsSource: Frost & Sullivan.Processors (MCU, MPU, DSP) RF Components and ICsOptoelectronics MEMS and sensors64%36%43%29%
    16. 16. 16Which industries will demonstrate the largest demand formicroelectronics products in the next three years?Other industries noted: Lighting, Healthcare, Energy, Automation SystemsSource: Frost & Sullivan.Aerospace & DefenceTelecommunicationTransportation• Role of State• Sharp increase of government financing• Change of production and purchase strategy• General development of the market• Growth of navigation segment• Localization of manufacturing in Russia• Focus on components production
    17. 17. 17What are the prospects of your company revenue growthin the next 3 years?10%18%27%45%0% 10% 20% 30% 40% 50%No change<10%annually10-20%annually>20%annuallySource: Frost & Sullivan.45%of respondents believe theirrevenue will grow faster thanthe market
    18. 18. 18What are the main strategic priorities for your companyin the next 3 years?Source: Frost & Sullivan.DiversificationDevelopment of new technologiesCost optimizationNew markets/ segments penetration1234Other priorities noted: Further penetration of the Russian market,Consolidation of the assets, Survival“Further penetration of the Russian Market is akey objective for us” ©
    19. 19. 19Microelectronic Market RestraintsRanked in Order of ImpactOther restraints noted• Lack of complex approach to government cluster policy• Unfair competition• Lack of development strategy and roadmaps for the industry• Customs limitation (significant period of time for all custom procedures)Insufficient government supportWeak local market demandDrawbacks in legislationTechnology and infrastructure insufficiency1234“Imperfect tax and customs legislation, focusedonly on fiscal measures” ©
    20. 20. 20What State measures are the most efficient for thedevelopment of microelectronics in Russia?Development of special clustersTax incentivesGrant/project financingFundamental and applied researchfinancingPreferences for local producers in statepurchase contractsExport supportPotentialeffectivenessLow HighLow HighLow HighLow HighLow HighLow High1 52 3 41 52 3 41 52 3 41 52 3 41 52 3 41 52 3 4of respondents noted thatcurrent government supportmeasures are NOT enough tomaintain RussianmicroelectronicscompetitivenessSource: Frost & Sullivan.92%
    21. 21. 21Key Emerging Technologies
    22. 22. 22Memory Technologies – Industry ScenarioTechnologiesMagnetoresistiveRAMPhaseChangeMemoryFerroelectricMemoryNanotechnology-Based MemoryEmerging MemoryTechnologies• There has been persistent demand for high density, low cost, low power, and high-performance data storage devicesattributed by end-user’s ever growing need for more memory.• Storage capacity of devices such as hard disk drives and flash drives are constantly enhanced; solid state drives withNAND flash memory are gaining momentum.• While CDs and DVDs are currently the most popular low-cost storage device, Blu-Ray discs though attributed by high-storage capacity are expensive and not widely adopted. Technologies, such as, holographic technology are capableof offering high-storage densities, but it is still in the development stage.• To effectively address the challenges associated with certain existing and emerging data storage technologies,researchers are investigating new memory technologies such as magnetoresistive random access memory (MRAM),nanotechnology-based memory (NRAM), phase change (PCM/PRAM) and ferroelectric memory (FRAM).Overview• MRAM is gaining momentum; and with improvements in performance and density, MRAM can be used for datastorage applications (solid-state drives). High speed, high capacity, non-volatility are the key attributes that makeMRAM a candidate of choice compared to other emerging memory technologies. With spin-transfer-torque-writeMRAM and toggle MRAM considered as alternate switching mechanisms to conventional MRAM, spin-transfer-torque-write MRAM is gaining attraction in the recent years, due to its low-power consumption and enhancedscalability over conventional MRAM.• Ferroelectric memory is characterized by high-access speed, high endurance in write mode, low-power consumption,non-volatility, and excellent mechanical resistance. Such memory finds potential use in smart cards, where highsecurity and low-power consumption features are desired, as well as in cellular phones and other applications suchas data storage devices.• PCM/PRAM is attributed by high endurance and enhanced scalability; PRAM may be considered in computermemory as well as in data storage systems/solid state drives in the long term.• Nanostructures such as CNTs are evolving to be potential data storage technologies due to their enhanced scalabilityand storage capacity.Trends
    23. 23. 23Compound Semiconductor – Technology Snapshot• Silicon MOSFETs have now approached a performance plateau, while cost of advancements hasincreased dramatically. Concurrently, next generation and emerging applications are demandingfurther substantial leaps in power conversion performance. Hence, to meet the new requirements offorthcoming applications, new materials and transistor structures are needed to fill this gap.• Using compound semiconductor materials, a new generation of electronic devices can be unleashedthat combine the capability to handle higher powers with lower switching loss and higher operatingfrequencies, that could boost the efficiency of power inverters, while trimming their size and weight.• Benefits that would follow include better power supplies for computers and more efficient powerconversion in solar converters and hybrid electrical vehicles.Overview• Although, silicon carbide (SiC) FETs have emerged on the scene in the past 10 years to address theseissues, they suffer from significant cost premiums due to limited quality material supply, as well as theintrinsic cost structure of the material.• Structurally, bulk gallium nitride (GaN) substrates have been prohibitively high-priced, requiring theuse of hetero-epitaxial films. However, major substrates used for GaN epitaxy until now, such as SiCor sapphire, have also been relatively expensive.• Gallium arsenide (GaAs) can operate at higher power levels than the equivalent silicon device thanksto a higher breakdown voltages. However, high power operation is limited due to the poor thermalconductivity of the material. Overall, GaAs offers a good balance of properties for a wide range of RFapplications.TrendsSiliconCarbideGalliumNitrideGalliumArsenideCompoundSemiconductorMaterials
    24. 24. 24Waves of InnovationEvolution of technologies at different rates gives rise to various waves of innovation that impact industries andmarkets at varying timesFlexibleElectronicsAdvancedChemicalBatteriesSmartSensorsElectricVehiclesFuture Application:Rollable-intelligentdown-hole pipemeasurementNew paradigm inautomotive industrypaving the way fornew players withdisruptive potentialFor e.g.: Bend polymer couldbe used for batteriesPrime Driver: ConsumerIndustry with growth annualglobal of CAGR >19% for 2014-20201 year2 year3 yearLegend:
    25. 25. 25Innovation Convergence Drives Solutions
    26. 26. 26Our Presenter TodayAnkit A. ShuklaPractice Director,EuropeTechnical InsightsFrost & SullivanGlobalOxford, UKFunctional Expertise• Extensive experience of working with global and regional organizations providing them guidance on key strategiesrelated to technology, innovation and business development• Particular expertise assisting R&D and Strategy teams in leading companies with the development andimplementation of their growth strategies in:- Technology strategy development- Innovation and Intellectual Property management- Commercial due diligence- Future R&D focus/strategic partnership developmentIndustry Expertise Experience base covering broad range of sectors and technology clusters, providing thought leadership guidanceto leading industry participants’ CTOs, R&D & Business Development Heads and Senior Executives in- Aerospace & Defense- Automation & Electronics- Research entitiesWhat I bring to the Team• Years of industry contacts and connections, understanding technology and market trends across sectors• Extensive client interaction and strategic project management• “Impossible is nothing” attitudeCareer Highlights• Worked at Space Applications Center (Indian Space Research Organization) on satellite payloads• At Frost & Sullivan, worked extensively with range of companies, government organizations, R&D Labs including:- BAE Systems, Thales, EADS, Lockheed Martin, W.L. Gore, SABIC, Total, BP, ABB- Kimberly Clark, SKF, Clariant, L’Oreal, Rusnano, Hitachi, Yorkshire Water, Schott AG- National Physics Laboratory (UK), VTT, Technology Strategy Board (UK) and many othersEducation• MS in Control Systems from University of Sheffield (Sheffield, UK)• B.Eng in Instrumentation & Control Engineering from Gujarat University (Ahmedabad, India)
    27. 27. 27For Additional InformationAnkit A. ShuklaPractise Director, Technical Insights (Europe)P: +44 (0) 1865-398687ashukla@frost.comAlexey VolostnovBusiness Development Director, RussiaP: +7 499 918 6146 | M: + 7 916 811 4425alexey.volostnov@frost.com

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