Tata Consultancy Services (TCS) is working with its group peer Tata Electronics Pvt. Ltd as the conglomerate races to launch the first chips made in India by 2026, a top executive at the country’s largest technology services provider said.
TCS, which designs and manufactures semiconductors for its clients, has numerous “touch points” with chip manufacturing where Tata Electronics has taken the lead, said Sreenivasa Chakravarti, vice president and global head of TCS’s digital engineering business. Other common services, he said, include software and intellectual property (IP)-based products for semiconductors.
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“We are part of the same group as Tata Electronics and there are leverage points where we are working together. The two companies are in different parts of the value chain, so we are leveraging our core expertise in what we excel at for this,” said Chakravarti, one of the key executives in TCS’s global technology and services vertical.
Three factories approved
In February, India’s Semiconductor Mission approved three chip facilities to develop the country’s strategically critical sector. Tata Electronics is building two of these facilities: an $11 billion chip factory with an initial capacity of 50,000 wafers per month, in collaboration with Taiwan’s Powerchip Semiconductor (PSMC), in Dholera, Gujarat; and a $3.26 billion project in Assam to assemble and test chips.
Assam’s first chip will be launched in late 2025 or early 2026, according to the group, and will cater to sectors such as automotive, energy, electronics, consumer and medical.
“We see a lot of companies coming to India and setting up shop here to develop technologies and services for global markets, but there is also a potential market for semiconductors in India,” he said. “So the challenge is to develop for India, from within India.”
A first for a technology services company
According to Omkar Tanksale, senior IT research analyst at brokerage firm Axis Securities, TCS is the first technology services company in India to have developed core semiconductor engineering and services capabilities.
“While companies like Infosys have expertise in semiconductor software, TCS is the only technology services provider that can capitalize on the semiconductor momentum in India,” Tanksale said. “Their work with Tata Electronics, as well as global companies like Fairfax and others, will take some time to reflect in revenues due to the economic cycle, but TCS has a core capability that can help them capitalize on the semiconductor rush in India.”
TCS has a major stake in semiconductor design and engineering and software development for semiconductor applications worldwide. However, it has not yet ventured into chip manufacturing, unlike its IT services peer HCL Technologies, which in January announced a joint venture to set up a chip testing plant with China’s Foxconn.
“We play a critical role for our clients in understanding the core technologies and how semiconductor design needs to evolve,” Chakravarti said, adding that TCS focuses on software-driven chip research and engineering to meet customer needs. That, he said, helps companies identify the right product for the market for their semiconductor operations, a factor that will also help Tata Electronics once its factory in Dholera, Gujarat, comes online.
Geopolitically sensitive
Semiconductor operations have become geopolitically sensitive, and projects such as the Tata group’s semiconductor push help develop core competencies internally, according to Chakravarti.
“It is not that every country is going to completely reinvent its technology stack. Our idea is that semiconductor products and IPs, once developed domestically, will ensure that security backdoors and other discrepancies that could lead to a technological breach are addressed,” he said. “This approach will continue and as a service provider, we are always ready to ensure that the necessary confidentiality is maintained on all equipment.”
In fiscal 2024, TCS’s digital engineering business revenue declined 1.5% year-on-year to $2.47 billion. In the company’s March quarter earnings call in April, TCS CEO K Krithivasan attributed the revenue decline in certain verticals, such as technology services, to slowing technology spending among clients amid inflation concerns.
However, Chakravarti said: “There are economic cycles that are more driven by technology itself, requiring companies to focus on their customers. Some of these bets take time to be identified, ensuring that we do not find any worrying slowdown in customer spending in the semiconductor sector.”
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