Alliance allots $50m for expansion of Indian operations
Rimin Dutt
Reddy
SANTA CLARA, Calif. - Alliance Semiconductor Corp. plans to invest an additional $50 million to expand its India operations over the next five years.
The company has already spent about $20 million on its Indian operations, which consist of design centers in Bangalore and Hyderabad.
Alliance plans to increase its engineering staff at the two centers from 167 to 300 over the next three years, said Damodar Reddy, chairman and chief executive officer of Alliance.
The Santa Clara, Calif.-based Alliance is a maker of analog and mixed-signal chip products for the communications, computing, industrial and consumer industries.
The company's Indian centers handle its design and development work and its U.S. offices overlook sales and marketing.
Alliance's Bangalore center, which was founded in 1998 and had focused entirely on semiconductor design, will now also work on software development and production, Reddy said.
The company's Hyderabad center, which was started in 2002 with the acquisition of the Hyderabad offices of chipmaker PulseCore Inc., focuses on the manufacturing of application-specific integrated circuits. The additional investment will be used to increase the centers production capabilities.
"Our design centers in India have done exceptionally well," said Reddy. "We're now moving into full-fledged operations."
The India center has grown from 20 to 167 engineers in the last five years, said Reddy.
The expansion is part of the company's turn-around strategy as well. The company reported a net loss of $ 19.4 million for the year ended March 31, 2004.
"With this new model, our mainstream (outsourcing) model should be good for another 20 to 30 years," said Reddy. "From getting design wins to production, we should become profitable within six to seven months."
"We hope to have $20 million or more in quarterly sales in the March quarter next year," he added.
Reddy attributed the losses to the acquisitions the company made in the last two years such as its partial acquisition of PulseCore in 2002 for $5.1 million.
Alliance also bought Chip Engines Inc. for $4.8 million in January 2003. Chip Engines designed semiconductor products for the networking, communications, cable and storage markets.
Alliance's main competitors include Cypress Semiconductor Corp., Integrated Device Technology Inc., Integrated Silicon Solutions Inc., PLX Technology, Samsung and Toshiba.
What gives the company an edge over its competitors is its use of a new technology called "electromagnetic interference suppression" in the manufacturing of its integrated circuit products, Reddy said.
The products are increasingly used in wireless products that are prohibited from use by airlines during take off and landing to reduce interference with the pilot's wireless signals, he added.
The publicly traded Alliance was co-founded by Reddy in 1985. It has 261 employees.
Its customers include Sharp Electronics, Epson Corp., Samsung Electronics Co., Sony Electronics Inc. and Hewlett-Product Co.
Prior to starting Alliance, Reddy co-founded and served as president and chief executive officer of the California-based Modular Semiconductor Inc.
Reddy has a bachelor's degree in electrical engineering from Osmania University, Hyderabad and a master's degree in electrical engineering from North Dakota State University. He also has a master's degree in business administration from Santa Clara University.
