"L&T Enters Semiconductor Sector with New Chip Firm and $300 Million Investment"

Larsen & Toubro Ltd. (L&T) is set to invest over $300 million in establishing a new fabless semiconductor company, marking a significant move in India's burgeoning semiconductor industry. Over the next three years, the Indian conglomerate will use this capital to develop and market its own semiconductor designs, although production will be outsourced. L&T plans to introduce 15 new chip products by the end of this year, with sales projected to begin in 2027, according to Sandeep Kumar, head of L&T Semiconductor Technologies.

This investment places L&T alongside other major Indian firms aiming to bolster domestic semiconductor production and reduce reliance on costly imports. As geopolitical tensions between Beijing and Washington intensify, electronics manufacturers, including chipmakers, are increasingly diversifying production away from China and Taiwan, positioning India as a key beneficiary.

Despite its substantial investment, L&T's commitment is relatively modest compared to industry giants like Nvidia Corp. and Advanced Micro Devices Inc. The company intends to focus on sectors undergoing significant transformation, such as automotive, industrial, and energy, by developing products like power chips, radio-frequency semiconductors, and mixed-signal integrated circuits.

"Automotive, industrial, and energy — those are the sectors we’ve picked as they are going through very heavy transformation,” Kumar noted. “There is space to compete, succeed, and even capture the market.”

As the global demand for semiconductors grows, driven by technological advancements and supply chain disruptions exacerbated by the US-China trade war, several countries are ramping up domestic chipmaking efforts. The US, Germany, Japan, and Singapore are among those enhancing their chip manufacturing capabilities to secure supply chains for critical technologies.

L&T Semiconductor Technologies currently employs about 250 staff members, primarily chip designers, with plans to double this number by the end of 2024. The company is seeking government support through subsidies or incentives for chip design but does not plan to seek external funding beyond the L&T group.

India's government has launched a $10 billion initiative to attract semiconductor manufacturers and suppliers, prompting significant investments from major players like Tata Group, which is building the country's first major chip factory, and US memory maker Micron Technology Inc., which is establishing a $2.75 billion assembly facility in Gujarat. The Adani Group also plans to construct a chip plant in partnership with an Israeli firm.

The head of the state agency responsible for approving semiconductor funding indicated this week that the $10 billion fund could be expanded further to support ongoing industry development.

BS