Semiconductors have become a crucial resource around the world, especially now that the trade war between the United States and China threatens to make chip imports even more expensive | Photo: Bloomberg
By Sankalp Phartiyal
Larsen & Toubro Ltd. plans to invest more than $300 million to create a chip company, joining other Indian conglomerates in an effort to build a semiconductor industry in the world’s most populous country.
The technology and construction company will invest the money over three years to set up a fabless chipmaker, which designs and sells semiconductors but hires third parties to produce them. It plans to design 15 products by the end of this year and start sales in 2027, Sandeep Kumar, director of L&T Semiconductor Technologies, said in an interview.
Both local and global companies are trying to capitalize on India’s efforts to build local semiconductor production capacity and cut costly imports by seeking to take advantage of government subsidies. Tensions between Beijing and Washington are prompting electronics manufacturers, including chipmakers, to diversify beyond China and Taiwan, and India is emerging as one of the beneficiaries.
L&T’s investment is modest compared with outlays by major fabless chipmakers such as Nvidia Corp. and Advanced Micro Devices Inc. The Indian company is targeting products such as power chips, radio-frequency semiconductors and mixed-signal integrated circuits, rather than areas such as graphics processing units that enable AI.
“Automotive, industrial and energy are the sectors we have chosen because they are undergoing a very deep transformation,” Kumar said. “There is room to compete, to succeed and even to conquer the market.”
Semiconductors have become a crucial resource around the world, especially as the US-China trade war threatens to make chip imports even more expensive. Several countries, including the US, Germany, Japan and Singapore, are boosting domestic chip manufacturing, trying to secure supplies of the components needed for technologies ranging from artificial intelligence to electric cars.
L&T Semiconductor Technologies currently employs around 250 people, most of them chip designers. By the end of 2024, that number will double, Kumar said.
The company has urged the government to help with subsidies or incentives for chip design for large companies, but will not seek funding outside the L&T group, it said.
Prime Minister Narendra Modi’s administration has created a $10 billion program to attract chipmakers and their suppliers. That plan has seen the Tata Group build the country’s first major chip factory and prompted U.S. memory maker Micron Technology Inc. to set up a $2.75 billion assembly plant in Modi’s home state of Gujarat. The Adani Group plans to build a chip plant with an Israeli partner.
India is open to expanding that $10 billion semiconductor fund, the head of a state agency that approves funding for chip projects said at a public briefing this week.
First published: September 11, 2024 | 9:15 am IS
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