Driven by increasing sales of electronics and burgeoning telecom sector, the Indian semiconductor design industry is expected to reach USD 10.2 billion by 2012, an industry body today said.

According to the India semiconductor Association, the Indian chip design industry, which comprises VLSI design, embedded software development and board design, is estimated to grow 17.3 per cent year-on-year from USD 7.5 billion in 2010.

"We need to better train our manpower to increase the quality of work churned out. Also, having a manufacturing ecosystem would provide a fillip to the semiconductor design industry," ISA President Poornima Shenoy told reporters here.

She added that the sector required more investment from venture capitalists to provide funds to companies as this is one business which has a long gestation period business.

According to the report, the Indian semiconductor design industry has employed a workforce of 1.6 lakh in 2010, of which embedded software accounts for as much as 82 per cent employment.

Consumer electronics and products contributed 34.43 per cent to the total demand, telecom/networking products and portable/wireless products comprised 30.77 per cent and 15.07 per cent of the demand for chip design projects, respectively.

"Emergence of technologies like LED screens, 3G, WiMax translates into increased demand, while automobile electronics in passenger and industrial vehicles has also added to the requirement for chip designing," the report added.