Frost & Sullivan Research Service   Published: 17 Feb 2006
Outsourcing R&D in the Electronics Industry (Technical Insights)
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   Research Overview
 

This Frost & Sullivan research service titled Outsourcing R&D in the Electronics Industry provides information on organizations, companies, universities, research institutions, and government agencies involved in the outsourcing and offshoring of R&D activities in the information and communications technology (ICT), semiconductor, as well as electronics industries. It further lists noteworthy industry activities in the arena and summarizes government regulations that regulate the growth of outsourcing/offshoring activities. A summary of key patents gives an insight into notable activities, technology trends, and important participants in this field.

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   Market Sectors
 

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

  • Outsourcing R&D in the electronics industry
   Market Overview
 

Increasing Globalization Spurs Growth of R&D Outsourcing in Electronics Industry

Considering the rapid progress in technology as well as the significant cost and price advantages to be gained, an increasing number of multinational corporations in the electronics industry are beginning to outsource more of their R&D activities. Developing countries are proving to be the fastest growing markets for outsourcing electronics R&D. In addition to the large pool of highly educated and skilled English-speaking workforce, the availability of a robust education system and low costs are the most decisive factors influencing the flow of R&D-related foreign direct investment (FDI) into a developing country. Key industries that are shifting their electronics R&D outsourcing to overseas destinations include medical instrumentation, aerospace, automotive, and telecommunications.

Among the major outsourcing destinations, China is the most attractive country in the world for FDI in the R&D sector. The proportion of China's spending in R&D to its gross domestic product (GDP) is on the increase and this ratio could surpass that of the European Union (EU) in the next five years. Multinational companies, which first partnered with local investors in the R&D sector in China, are now establishing their wholly owned centers and in the last decade, the number of patents filed by these multinational companies increased at an average rate of 30.0 percent every year. "In addition to China, India is also emerging as a major R&D hub and private sector research in electronic components and ICT sectors has received a major boost as a result of growing off-shoring and outsourcing activities," notes the analyst of this research service. "Apart from software technologies, India is also emerging as a R&D hub in electronics hardware, which is seen in the ability of Agilent Technologies India Pvt. Ltd to develop pioneering state-of-the-art technology for the test and measurement instrument industry."

Trend Toward Global Networks of Innovation

A notable trend in the R&D outsourcing industry is the move toward developing global networks for the purpose of product development. Through this, companies are leveraging the capabilities of different regions to build an efficient R&D chain. For instance, Europe specializes in the medical, automation, as well as automotive technologies and the United States specializes in instrumentation and control as well as the biotechnology and nanotechnology sectors, while India specializes in software and China in production technologies. Setting up R&D facilities in each of these locations based on their capabilities for distributed product development has escalated the quality of products and decreased the time for development. Hence, an innovation model could involve a U.S. chip designer, a software development company from India, and an electronic product development firm based in China.

With regard to the notable outsourced R&D developments in the electronics industry, the R&D center of Nortel situated in Guangzhou, China has carried out a demonstration of what is viewed as a breakthrough in wireless networks technology. "The seamless handoff of broadband voice and multimedia services as well as Nortel's first session initiation protocol (SIP)-based video call handover between a live high-speed downlink packet access (HSDPA) network and a wireless network was demonstrated by the company," says the analyst. "As a result of this technology, uninterrupted connections to broadband services is likely to be possible, while roaming between 3G networks and WiFi, WLANs, and wireless mesh networks."

  Table Of Contents
1. Executive Summary and Methodology
        1. Scope and Methodology
                  1. Scope
                  2. Methodology
        2. Overview and Key Findings
                  1. Overview
                  2. Key Findings
 
2. Assessment of Outsourcing R&D Trends in Electronics Industry
        1. General Industry Trends in Outsourcing Electronics R&D
                  1. R&D Capabilities of Contract Manufacturers Expanding
                  2. The Impact of Outsourced R&D for Organizations
                  3. Intellectual Property Rights and Issues
                  4. Global Networks of Innovation
        2. Leading Outsourcing Destinations and BRIC Country Trends
                  1. India Emerging as a R&D Hub
                  2. Impetus to Chinese R&D through Reforms
                  3. Russia--Emerging as a Key Offshore Outsourcing Center
                  4. Eastern Europe Becoming a Low-Cost R&D Destination
        3. Analysis of R&D Strategies and Spending by the Western World
                  1. Downsizing R&D On-Shore
                  2. Outsourcing to Academic Institutions
                  3. R&D Heading toward Convergence of IT and Electronics
 
3. Outsourced R&D Adoption Factors Analysis
        1. Analysis of Drivers for Outsourcing Electronics Innovation
                  1. Development of Efficient R&D Strategies
                  2. Highly Skilled Pool of Graduates in Developing Economies
                  3. Developing Countries Create Conducive Environments for R&D
                  4. Time to Market; and Market Segmentation
                  5. Country Specific Economic and Legal Factors
        2. Analysis of Challenges to Electronics R&D
                  1. Implementation and Project Management Factors
                  2. Negative Impacts of R&D Outsourcing
                  3. Potential Threat to the United States Department of Defense
                  4. Restriction of Hazardous Substances Directive (RoHS)
 
4. Outsourced R&D in the Electronics Industry
        1. Research and Development in Telecom Outsourcing and Offshoring
                  1. Handoff between Advanced Wireless Networks
                  2. ATI Technologies Acquires CuTe--Develops Solutions for Handhelds
                  3. Design of Wireless Handsets and Terminals for OEMs
                  4. Motorola Expands Its Position in India
                  5. Augmentum’s Success in Distributed Development for the Software Market
        2. Research and Development in Semiconductor and Electronics Outsourcing/Offshoring
                  1. Flextronics Software Systems Spearheading Innovation
                  2. Siemens AG--Globalization of R&D Strategies
                  3. Outsourced Semiconductor and Testing Capability--Amkor Technology Inc
                  4. Infineon and Nanya Expand Development Collaboration
                  5. Atmel Flash Memory Production by 1st Silicon
                  6. Intersil Corporation Outsources to ChipPAC for Testing of FLEX Test System
                  7. Cranfield University and Boeing Company collaborate on R&D
                  8. Esmertec Forms Alliance with China Mobile Communications Corporation
                  9. Sequence Design's Globalized Model of R&D and Innovations
        3. Industry Activity in Outsourcing R&D in the Electronics Industry--World
                  1. Information and Communication Technology Sector
                  2. Semiconductor and Electronic Components Sector
 
5. Company Profiles and Patents
        1. Major Electronics R&D Organisations
                  1. Wipro Corporation (India)
                  2. Infosys Technologies Ltd. (India)
                  3. Tata Consultancy Services (India)
                  4. HCL Technologies (India)
                  5. Satyam Computer Services Ltd. (India)
        2. Major Electronics Design & Manufacturing Providers
                  1. Flextronics International Ltd. (Singapore)
                  2. Quanta Computer Inc. (Taiwan)
                  3. Solectron Corporation (US)
                  4. Sanmina-SCI Corporation (US)
                  5. Huawei Technologies Co. Ltd. (China)
        3. Patents
                  1. United States Patents
                  2. Patents from Rest of the World
        4. Key Research Contacts
                  1. Corporate Contacts
                  2. Academic Contacts
 
6. Frost & Sullivan 2006 Science & Technology Awards
        1. Excellence in Research
                  1. Award Description
                  2. Award Recipient
        2. Technology Innovation
                  1. Award Description
                  2. Award Recipient
 
7. Decision Support Database
        1. Decision Support Database Tables
                  1. PCB Sales--World (1999 to 2006)
                  2. Semiconductor and Semiconductor Equipment Market--World (1999 to 2006)
                  3. Portable PC Installed Base--World (1999 to 2006)
                  4. GSM Subscriber Base--World (1999 to 2006)
                  5. Medical and Industrial Equipment Contribution to the Electronic Industry--World (1999 to 2006)
                  6. Consumer Electronics Contribution to the Electronics Industry--World (1999 to 2006)


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