IC design seen as an 'unexploited strength' but companies need a more global outlook. Russia has the homegrown engineering talent and a tradition of scientific research and education that could promote the growth of a fabless industry. But it has produced few IC design firms.

Denis Adamov, COO of UniqueICs LLC estimates that 20 to 30 indigenous IC design companies exist in the Moscow area, with maybe another dozen sprinkled around Russia. The fate of some of these companies hinges on one product.

“No Russian IC design house has significant profits and IC volume,” Adamov said. With 350 employees, UniqueICs is Russia’s biggest IC design house. The main problem is that Russia has few customers. A fabless house must seek technology partners and customers outside the country to compete in the chip industry. But setting up an international sales and marketing structure is beyond the resources of many small companies.

UniqueICs is one example of a Russian company working almost entirely outside the country. Based in Zelenograd, near Moscow, the company designs a range of silicon sensors and develops chipsets for DVD recorders and HDTVs. Aside from design work, everything is done in the Far East.

Although two domestic wafer fabs, Mikron and Angstrem, are just down the road in Zelenograd, the company’s foundry partners include Malaysia’s Silterra and Japan’s Elpida. Most of their customers are in China and Taiwan. “UniqueICs is trying to succeed by selling its CMOS sensors on the Asian market,” Adamov said.

IDM Ltd., another fabless company in Zelenograd, has been in business for 15 years. It has found work with foreign partners such as Xilinx Inc. to design RF ICs. The 25-person company is developing novel computing architectures and reconfigurable systems, which promise performance benefits well beyond current architectures, said Vladimir Kozlov, director. He’s constantly on the lookout for foreign partners. “It’s very hard [for a fabless company] to survive in Russia without foreign customers,” Kozlov said. “It’s not so easy to do. We spend a lot of time on it and have had a good track record.”

The only route to survival in this market may be going global from day one, according to industry watchers. Malcolm Penn, chairman and CEO of Future Horizons (Sevenoaks, England) noted that “the clear dominance of the U.S. and Taiwanese firms with their strong indigenous OEM/customer base is no coincidence. Likewise, the poor showing from Europe (only one, Cambridge Silicon Radio, is ranked in the top 30 despite there being over 300 fabless firms) is the direct result of few European customers.”

Penn added that “European (and Russian) firms need to be international from their inception, whereas U.S. and Taiwanese firms need only to find a local customer from their doorstep. This significantly reduces the marketing and business development challenge (time, costs, skills), especially in the formative years when resources are limited. Russian firms have the additional problem of little international marketing experience, language and travel restrictions (visas, etc.) plus a ‘natural’ customer resistance/skepticism to overcome.”

Fabless companies also have raced ahead of domestic production technology. UniqueICs is producing 1.3 Megapixel sensors with foundry partner Elpida. Mikron, Russia’s leading fab, has plans to upgrade production to 0.18 micron, which when implemented and stabilized would be Russia’s most advanced commercial process technology. Many engineers opt to work for foreign companies instead of starting their own businesses. Motorola Inc., Freescale Semiconductor Inc. and Intel Corp. are among the various multinationals running Russian R&D operations.

“Many companies are looking for Russian engineers, and it’s getting harder to find them,” Adamov said. UniqueICs has contacts with the local universities and has established its own courses. But the company expects to open a new IC design center in Minsk, Belarus, where there is less competition for talent, he added.

Government assistance has mainly been in the form of providing infrastructure, such as a series of new technology parks under construction. But according to Alla Famitskaya, regional director of the Commonwealth of Independent States for the SEMI organization in Moscow, the state now intends to support IC design by funding EDA software purchases for small companies and establishing several design centers across Russia.

IDM’s Kozlov sees IC design as Russia’s unexploited strength that could potentially put it on the global semiconductor map. In software, India is a fierce competitor and in electronics production, China dominates. “It is hard to compete with these countries,” Kozlov said. “But in chip design, where it’s necessary to have a strong educational background in basic mathematics and physics, Russia has a very good chance.”