"L&T Commits ₹830 Crore Investment for New Chip Design Unit"

Larsen & Toubro (L&T) has greenlit an investment of ₹830 crore to establish a wholly-owned subsidiary dedicated to fabless semiconductor chip design and product ownership. This strategic move was disclosed during a media interaction discussing the company's Q2 results, with R Shankar Raman, the Chief Financial Officer, shedding light on their plans.

The new venture will be exclusively focused on chip design and will not delve into chip manufacturing. Shankar Raman emphasized their confidence in the abundant talent pool for chip designing in India, stating, "We have decided to stay at the design-end of it."

He noted that many multinational corporations have already established their chip design centers in India, instilling confidence in L&T's ability to seize opportunities emerging in the chip and semiconductor market. Shankar Raman acknowledged the formidable competition posed by Chinese, Taiwanese, and Korean companies in chip manufacturing and clarified, "That's not an area that we are targeting at the moment."

The CFO also highlighted the significance of semiconductor supply chain disruptions brought to the forefront by the COVID-19 pandemic, underscoring the critical role chips play in production and the economy.

L&T, already possessing domain expertise in engineering design through its subsidiary L&T Technology Services, has plans to set up multiple design centers in India and is considering establishing an R&D center in the United States. The primary focus of this new endeavor will be on automotive and industrial chip design. This strategic move underscores L&T's commitment to diversifying its operations into the promising field of semiconductor chip design.

HBL