L&T aims to become first Indian semiconductor chipmaker in global market: CEO

L&T Semiconductor Technologies (LTSCT) plans to build three semiconductor factories in India over the next five to ten years with potential investments of USD 10-12 billion, as the L&T group’s new business vertical aims to become a multinational semiconductor player.

“The vision is to become the first global semiconductor company operating from India, headquartered here, with presence in the US, Europe, Japan and India,” said CEO Sandeep Kumar in an exclusive interaction. “The centre of gravity for all development and manufacturing will be in India.”

Income contingent

Kumar said the company’s transition from being a system-on-chip (SoC) design company like Qualcomm or Mediatek, which it is today, to building chips in its own factories will depend on generating $1 billion in revenue.

“Our goal is to generate enough line of sight to get $1 billion in annual revenue, which could happen within the next two to three years, then I can start building my factory or fab,” Kumar said, adding that he would need to produce and sell 500 million chips.

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He stressed that because the company was working on different technologies (high-end silicon chips and mid- and low-end silicon carbide and gallium nitride chips), three different factories will be established in the long term, which will involve different levels of investment.

He noted that the return on investment as well as the availability of financial incentives from the Indian government at that time will be key in determining investments.

“In case of silicon, it is more than $10 billion. Silicon carbide is around $1 billion and gallium nitride can be around $500 million,” Kumar said, but added that the order book would have to be strong to operate the factory at full capacity as that would be the key requirement to manufacture chips at globally competitive prices.

“On the silicon side, all the details of the partners are ready. On gallium nitride, we are halfway there, and I have 15 ongoing discussions on silicon carbide, so in the next three months we will have decided who we will work with,” Kumar added.

Six agreements in line

As things stand, revenues will start flowing in the next few months as it expects to close six deals in the automotive space worth $150 million in the next two months, which will include orders from three major Indian players, while orders from three major European customers will come in by October this year, according to Kumar.

It will focus on the automotive, energy and industrial sectors, and will manufacture mixed-signal, smart power, smart analog, smart sensing and smart RF SoCs and solutions. The company operates across all nodes and technologies, with silicon chips ranging from 40nm to 7nm for digital use, designed in-house and manufactured by Taiwan’s TSMC.

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Kumar said Global Foundries in the US is making analog and power chips using a mixed-signal digital process, ranging from 130nm to 28nm, on silica. Two Japanese partners are making silicon carbide chips, while Global Foundries and Taiwan’s VIS Technologies will make chips for radio frequency and power devices based on gallium nitride.

He added that the number of employees has increased to 200 in the last six months and will increase to 500 by February 2025, across India, the United States, Europe and Japan.

Pivot to technology

L&T’s semiconductor business was set up in 2023 with a capital investment of ₹830 crore for fabless chip design, as part of the engineering and construction conglomerate’s pivot to become a more technology-oriented group under chairman and managing director SN Subrahmanyan, who took over the reins from AM Naik in 2017.

L&T has also entered into data centre business, electrolyser manufacturing and battery energy storage, all next-generation high-tech businesses. Green businesses contributed half of the group’s standalone revenue in FY24.

While the semiconductor division was new in a market dominated by the likes of Qualcomm, NXP and others, Kumar said L&T’s long track record combined with the products it is co-developing with customers will help it win deals and ensure a strong sales pipeline.