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Larsen & Toubro plans to invest more than $300 million to set up a semiconductor company, joining other Indian conglomerates looking to build a semiconductor industry in the world’s most populous country.
The technology-to-build company plans to spend three years investing in building a fabless chip manufacturer that will design and sell chips but outsource production. The plan is to design 15 products by the end of this year and start selling them in 2027, Sandeep Kumar, president of L&T Semiconductor Technologies, said in an interview.
Global and local companies are jumping on the bandwagon and seeking to take advantage of government subsidies as India boosts its domestic semiconductor production capacity and cuts costly imports. Tensions between Beijing and Washington are pushing electronics makers, including chipmakers, to diversify beyond China and Taiwan, making India well placed to benefit.
L&T’s investment is modest compared with spending by other large fabless semiconductor makers 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 AI-enabled graphics processing units.
“Automotive, industrial and energy are the sectors we chose because they are undergoing tremendous transformation,” Kumar said. “There is scope to compete, succeed and even capture the market.”
Semiconductors have become a vital resource around the world, and the price of semiconductor imports is threatening to rise further, especially as the U.S.-China trade war threatens to send the industry into a tailspin. Several countries, including the U.S., Germany, Japan and Singapore, are ramping up domestic semiconductor manufacturing to ensure supplies of components needed for a range of technologies from AI to electric vehicles.
L&T Semiconductor Technologies currently employs about 250 people, mostly chip designers, and Kumar said he plans to double that number by the end of 2024.
The company has asked the government for support in chip design subsidies and incentives for large companies, but said it will not seek financial assistance from outside the L&T group.
The story continues
Prime Minister Narendra Modi’s government has created a $10 billion program to lure chipmakers and their suppliers, with the Tata Group building India’s first large-scale semiconductor fab and U.S. memory maker Micron Technology building a $2.75 billion assembly plant in Modi’s home state of Gujarat. Adani Group plans to build a chip factory with an Israeli partner.
India is open to expanding its $10 billion semiconductor fund, the head of the government agency that approves funding for semiconductor projects said in a public briefing this week.
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