Larsen & Toubro Ltd. (L&T) is entering the semiconductor industry with plans to invest over $300 million to establish a fabless chip company. This move aligns with India’s push to develop a homegrown semiconductor sector as it seeks to reduce reliance on costly imports.
Over the next three years, L&T will focus on designing semiconductors but will outsource production. The company aims to develop 15 products by the end of this year and begin sales in 2027, according to Sandeep Kumar, head of L&T Semiconductor Technologies.
This investment by L&T comes amid a broader global shift as electronics manufacturers and chipmakers look to diversify their operations away from China and Taiwan, driven by rising tensions between Beijing and Washington. India is seen as a growing destination for such investments, with government subsidies available to boost domestic semiconductor manufacturing.
While L&T’s investment is smaller compared to major global players like Nvidia and Advanced Micro Devices (AMD), the company will focus on developing power chips, radio-frequency semiconductors, and mixed-signal integrated circuits.
These components are crucial in sectors such as automotive, industrial, and energy, all of which are experiencing significant technological transformation. “Automotive, industrial, and energy are sectors that are undergoing major shifts, providing opportunities for us to compete, succeed, and capture market share,” said Kumar.
Semiconductors are becoming increasingly critical as supply chain disruptions, exacerbated by the US-China trade tensions, have made chip imports more expensive. Countries like the US, Germany, Japan, and Singapore are ramping up domestic chip manufacturing to secure the supply of components essential for technologies such as artificial intelligence (AI) and electric vehicles.
L&T Semiconductor Technologies currently employs around 250 people, most of whom are chip designers. The company plans to double its workforce by the end of 2024. Although L&T has asked the Indian government to offer subsidies for chip design, it intends to finance the venture internally, without seeking external funding.
India’s government, led by Prime Minister Narendra Modi, has launched a $10 billion incentive program aimed at attracting global chipmakers and their suppliers. This initiative has already led Tata Group to establish the country’s first significant chip manufacturing plant, while US-based Micron Technology is setting up a $2.75 billion assembly facility in Gujarat.
The Adani Group also plans to build a chip plant in partnership with an Israeli company. According to a state agency overseeing semiconductor funding, India is open to expanding its $10 billion fund to further boost domestic chip manufacturing.
