Microelectronics industry looks to recover past glories with demand boost

Russia is looking to boost its microelectronics industry with a Russian ‘Silicon valley.’ But industry players say demand needs to be boosted and the industry is starting from behind.

Earlier this month top government officials announced the urgent need for a Russian Silicon valley. Andrey Malishev, Deputy General Director of Rosnano argues that public-private cooperation is the key to unlocking the high-tech sphere.

“The reason to create a Silicon valley is to transform ideas into real technology that is in demand. Knowledge should be united with the needs of business. Such projects should be carried out on the basis of public-private cooperation.”

Even at its cutting edge, Russia is behind. Micron – Sitronics is currently developing 90 nanometers chip technology, due to go into production in one year. The current world leaders are pushing for 20 nanometers – which means Russia is at least 2 to 3 generations behind in the design cycle.

But the gap is narrowing and Russian producers are looking to stimulate demand, to close it further, says Sergey Aslanyan from Sitronics.

“Our problem is demand – we need a bigger market in order to load our production. Then we will be able to reinvest the profit into development of new technologies. If in production we are 5 years behind the world, in research – it's double that."

U.S, Japan and South Korea are the leaders in microelectronics. The market in 2009 totaled almost $250 billion and is continuing to grow according to Beatrice Shepherd, Director CEE, at Frost and Sullivan.

“This year we are already predicting a jump of over $274 billion, which is more than it was before the crisis. There are key industries in this country, like energy, oil gas, nowadays it’s health industry, and many of microelectronics. For these industries 70 – 80% are being imported.”

The government has put into place a whole range of measures to encourage innovation and diversify the economy away from raw materials. It has helped build technology parks and new factories, but business leaders say a key component is still missing and that's the ability to consistently come up with innovative ideas.