BERLIN — A cocktail of Russian government support, research talent and Western technology assistance has created strong potential for fabless industry growth, according to Thomas Golinske, sales group director for CEE at Cadence Design Systems Inc.

In 2006, Cadence partnered with the Moscow Institute of Electronic Technology (MIET) to provide design tools and expertise to boost development of fabless startups.

The project, known as "Inspire the Russian Innovation System," or IRIS, has begun to bear fruit, said Golinske.

IRIS has produced a dozen fabless startups with an actual product, bringing Cadence 12 customers. The startups are working in defense-related, infrastructure and consumer areas.

In the last two years, IRIS has made Russia a fundamental part of Cadence's CEE business, bringing an increase in sales for its tools and services, he said.

"We have seen the payoff [from IRIS]," Golinske said, but declined to give specific sales figures for Russia.

Cadence employs 130 in Russia and he expects to increase staff this year by 10%. The company runs an R&D office in Moscow and in November opened an office for Cadence virtual CAD services in Zelenograd, Russia's Silicon Valley located near Moscow.

Cadence earlier this year invited German customers working in the wireless and automotive sectors to Russia to introduce them to the IRIS program and Russian analog design activity.

Golinske believes some partnerships will result from the visit.

"What makes it interesting is that the Russian government puts money on the table for some projects [in the domestic sphere], while the Western European partner can take care of markets outside Russia," he said.

IRIS is expected to generate many more startups, provided the government remains as actively supportive of the sector as it is now, he said. Skilled labor limitations are not yet evident because design talent exists throughout the country in academia and in research institutes.

"We don't see a shortage of [semiconductor] engineers at the moment," Golinske said.

In addition, microelectronics activity is spreading. Zelenograd is set up as an economic free zone with special benefits to support microelectronics development. More such zones are planned for the cities of Voronezh and Nizhny Novgorod.

Even in the Siberian city of Omsk, 1800 miles east of Moscow, there is a Cadence customer support center. The region is rich in oil and gas and officials see microelectronics investment as a prestige project, he said.

"All over the country it is seen as prestigious to be dominant in this business," Golinske said.

Russia will see a natural growth of fabless companies, he predicts. "You will see the growth coming from government investment where we have a partnership with IRIS."

Golinske wouldn't speculate on the total available market for EDA in Russia. "I don't want to wake up my competitors," he said.

The oil-rich government has the cash and the plans to support microelectronics and officials envision a chip industry model leaning toward vertical integration.

"They see it as a 'must' to have the complete range of activities inside Russia, from idea to production," Golinske said. "This is a strong belief at every level of people we talk to."

However, developing a chip industry takes years if not decades and others have questioned whether Russia has the political will for sustained support if oil revenues decline.

Russia also needs to do more work in developing effective IP protection, fair investment and tax regulations and anti-corruption measures before the high-tech zones can prove to be more than just real estate projects.

Related articles:

Russian startup brings hands-free control to US market

Synopsys finds second home in Armenia

Russia's fabless firms seek lifeline