Larsen & Toubro Ltd (L&T), a major Indian conglomerate with interests in technology and construction, has announced plans to invest over $300 million in establishing a new fabless semiconductor company.
This move marks a significant step in India’s push to build its semiconductor industry and reduce reliance on costly imports.
L&T’s investment will be spread over three years to set up a fabless chip company. Unlike traditional semiconductor firms that manage their production facilities, fabless companies focus on designing and selling chips while outsourcing manufacturing to specialized facilities.
15 products by the end of the year
The new venture will concentrate on developing 15 different products by the end of this year, with sales anticipated to commence in 2027. The company will initially focus on sectors undergoing substantial transformation, such as automotive, industrial, and energy.
Sandeep Kumar, head of L&T Semiconductor Technologies, highlighted the potential in these sectors, noting the company’s intention to target areas like power chips, radio-frequency semiconductors, and mixed-signal integrated circuits. This contrasts with major global fabless chipmakers like NVIDIA and AMD, often focusing on high-performance products such as AI-enabling graphics processors.
L&T Semiconductor Technologies currently employs around 250 people, mainly chip designers, and plans to double its workforce by the end of 2024. While the company is seeking government support through subsidies or incentives for chip design, it has indicated that it will not seek external funding beyond the L&T group itself.
India’s semiconductor sector is poised for growth and is supported by government initiatives and private investments. The country’s increasing focus on building a robust semiconductor ecosystem reflects its strategic importance in the global technology landscape.
With its substantial investment and strategic partnerships, L&T is set to play a significant role in shaping India’s semiconductor future, contributing to the broader goal of establishing the country as a leading player in the global semiconductor industry.
Strategic collaboration with IBM
In a strategic move, L&T partnered with IBM to advance processor technology. This collaboration aims to develop high-performance, secure, scalable processors for edge devices and hybrid cloud environments. The partnership is expected to enhance India’s position in the global semiconductor industry by creating competitive technology solutions across several critical sectors, including automotive, energy, and industrial applications.
The collaboration will leverage L&T’s expertise in semiconductor design alongside IBM’s advanced processor technologies. This partnership is expected to be crucial in supporting India’s ambitions of becoming a key player in the semiconductor industry.
Semicon going beyond Taiwan
The semiconductor industry has become increasingly vital, particularly as geopolitical tensions, such as the US-China trade war, threaten to drive up the cost of chip imports. Countries worldwide, including the US, Germany, Japan, and Singapore, invest heavily in domestic chip production to secure their technological supply chains.
In response to these global trends, India is enhancing its semiconductor capabilities. Prime Minister Narendra Modi’s administration has launched a $10 billion program to attract semiconductor manufacturers and their suppliers.
This initiative has already led to significant investments, including Tata Group’s plans for the country’s first major chip factory and Micron Technology Inc.’s $2.75 billion assembly facility in Gujarat. The Adani Group is also set to establish a chip plant in collaboration with an Israeli partner.
