L&T aims to be India’s first chip maker in global market: CEO

L&T Semiconductor Technologies (LTSCT) plans to set up three semiconductor factories in India over the next five to 10 years, with an estimated investment of $10-12 billion, as the L&T Group’s newest business unit aims to become a multinational semiconductor company.

“Our vision is to be India’s first global semiconductor company, with a presence in the US, Europe, Japan and India,” CEO Sandeep Kumar said in an exclusive interview. “All development and manufacturing will be centred in India.”

Depending on the revenue

Kumar said the company would need to reach $1 billion in revenue before it can transition from being a system-on-chip (SoC) designer like Qualcomm Inc. or MediaTek Inc. to manufacturing its own chips in its own fabs.

“Our goal is to have enough visibility to hit $1 billion in annual sales, which we can achieve within the next two to three years, and then we can start building factories, fabs,” Kumar said, adding that the company needs to produce and sell 500 million chips.

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He stressed that in the long term, three different factories will be set up, each requiring different levels of investment, as the company is working on different technologies – high-end silicon chips, and mid- to low-end silicon carbide and gallium nitride chips.

He noted that the return on investment and the availability of financial incentives from the Indian government at the time would be key in deciding to invest.

“For silicon, (investment) is over $10 billion. For silicon carbide it could be over $1 billion and for gallium nitride it could be in the range of $500 million,” Kumar said, but added that there needs to be a strong backlog to run factories at full capacity, as that is a key requirement for producing chips at globally competitive prices.

“For silicon, all the partner details are in place. For gallium nitride, we are half way there and for silicon carbide, 15 discussions are underway. In the next three months, we will decide with whom we will work,” Kumar added.

Six transactions planned

As things stand, the company is on track to close six automotive deals worth $150 million in the next two months, including orders from three major Indian companies, while orders from three major European customers are also due to come in by October this year, so revenues will start flowing in over the next few months, Kumar said.

The company manufactures mixed-signal, smart power, smart analog, smart sensing, smart RF solutions and SoCs targeting the automotive, energy and industrial sectors. The company operates across nodes and technologies, with 40nm to 7nm silicon chips for digital applications designed in-house and manufactured by TSMC in Taiwan.

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Globalfoundries of the U.S. will manufacture its mixed-signal digital process for power and analog chips in the 130nm to 28nm range on silica. Silicon carbide chips will be made by two Japanese partners, while chips for gallium nitride-based radio frequency and power devices will be made by Globalfoundries and Taiwan’s VIS Technologies, Kumar said.

He added that the headcount has grown to 200 in the last six months and is on track to reach 500 by February 2025 across India, the US, Europe and Japan.

Shifting to technology

L&T’s semiconductor business was set up in 2023 with capital expenditure. ₹The company is investing Rs 8,300 crore in fabless chip designs as part of a transformation into a more technology-driven engineering-to-construction conglomerate under Chairman and Managing Director SN Subramanian, who took over from AM Naik in 2017.

L&T is also involved in data centres, electrolysis equipment manufacturing and battery energy storage, all next-generation hi-tech businesses. The green business contributed to half of the group’s standalone revenue in FY24.

While the semiconductor division is a newcomer in a market dominated by the likes of Qualcomm and NXP, Kumar said L&T’s long track record and the products it develops in collaboration with customers will help it win deals and secure a robust sales pipeline.