Interview: 'Our prototype of the telecom processor that enabled VoIP has taken off in a big way'

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Donning the cap of a venture capitalist; Vinod Dham, the father of the Pentium, is the cofounder of New Path Ventures. He has invested in a host of new ventures. In an exhaustive interaction with Shashwat Chaturvedi from CyberMedia News, Dham spoke at length about his views on the latest trends in the semiconductor industry and the roadmap for India

Is the semiconductor industry becoming too consumer centric?
The semi-conductor market has evolved over the last four decades or so and has run through its course. Were we to plot a graph, we would be at what one traditionally refers to as the bit curve. First there is the innovation, followed by adoption and then saturation. I think we are at the top of the bit curve, a saturated market, where the cost of semiconductor is very cheap and the performance required is no longer an issue.

Semiconductor has become an integral part of our everyday existence; it is present in cameras, cell phones, DVD players, and others. Every aspect of home is getting the full benefit of this semiconductor revolution and the main beneficiaries are the consumers. Companies have become conscious of this demand, and the industry is re-structuring itself right now.

In the past you had spoken quite vociferously about the telecom processor, what is the latest on that?
Back in the nineties, I had realized that the race for higher and higher performance would come to an end. Connectivity would be the key in the future. The idea was to stay connected on high-speed bandwidth. But, with Internet becoming more pervasive, there was a slowing in the flow of information. In that context, I had coined the word telecom processor to put the discussion, that we need a chip that allows us to have that connectivity, in center stage. At Silicon Spice, we had created a prototype of the telecom processor that enabled Voice over Internet Protocol (VoIP) and even allowed multiple VoIP conversations. The idea has now taken off in a big way, globally.

What about the race to Moore's Law (according to which the transistor density of integrated circuits doubles every 18 months)?
I think that Moore's Law is reaching a point where it is a getting more limited by economics rather than by physics. Doubling the density is getting very complicated by the day and it will take lot more effort and much more expense to reach the same point, every time. Thus very few companies would be able to reach the same point (doubling the capacity). The primary reason for reaching that point was to get higher density, which translated in lower cost. This was the driving force for most of the microprocessor industry to for last 20 years. But now affordability will be a big constraint, thus doubling the density will not be the main objective anymore.

There has been a lot of debate on the road India should take, should we go for manufacturing or design?
India is a great destination for chip design. Silicon Spice, a company I funded back in 2002, is a testimonial to that. I think there is absolutely no reason why Indian engineers who have been doing so well in software, should not move into the new space. India could easily extend its software expertise to chip design.

But as far as manufacturing is concerned, one has to be very careful. There has to be in-depth analysis on the course of action to be taken. For instance, what is the real competitive cost that India can offer over the Chinese manufacturers? How can Indian players compete in against these well-entrenched companies? Before we invest billions of dollars in the country, one has to make a partnership with potential customers so facilities are not idle. It is like buying a Jumbo 707 and not getting the permission to fly that plane, it does no body any good. One might take the high ground of owning a big plane but you will be losing millions everyday. Hence, I caution everyone against having a fab in India, one has to careful about how to go about such an enterprise.

What is the latest on your avatar as a venture capitalist?
At the start of my VC days, I had focused on hardware companies, builders of systems, semi-conductors and embedded software etc. I had invested in companies like Nevis Networks, and others.

Going forward, I am doing a new fund for Indo-US ventures, for which we will be addressing the market in terms of projects in the mobility space, and things surrounding service infrastructure, healthcare and other areas.