L&T Semiconductor Technologies, a fabless chip company, anticipates that manufacturing of semiconductor products it has designed will commence within the next two years, according to the company’s Chief Executive Officer, Sandeep Kumar. In an interview with PTI, Kumar revealed that L&T Semiconductor Technologies plans to establish its own chip manufacturing plants once it reaches specific revenue thresholds.
These benchmarks range from USD 50 million to USD 1 billion, depending on the type of semiconductor technology being developed. The company is making significant strides toward this goal by assembling teams to concurrently handle approximately 15 different semiconductor products. Kumar shared that L&T Semiconductor is already halfway through this journey.
“We expect to have our full capacity ready within the next six months. By the end of this year, we should be able to manage the design of 15 products simultaneously. Currently, with half our team in place, we have initiated the design process for six products. These designs are projected to be completed by the end of next year, and production is expected to begin two years from now,” he stated.
Kumar emphasized the importance of starting as a fabless chip company, especially for a country like India, to reduce its reliance on foreign semiconductor firms. “Our priority is to first develop our products. We need to ensure that these products have real strategic value before moving forward. If we build a factory prematurely and rely on external designs, we might be at the mercy of foreign companies. There is always the risk that if a foreign fab falters, our production halts with it,” Kumar explained.
He also touched upon a hypothetical situation where, if a developed nation decided to withhold semiconductor technology from India, it could significantly impact the domestic tech industry, leaving the sector vulnerable. He clarified that while the approach of others in the semiconductor industry is not necessarily wrong, the foundry business model—where factories are built to produce chips for various customers—comes with its own set of risks.
Several companies, including Tata Electronics, Micron, CG Power, and Kaynes Technologies, have already committed to establishing semiconductor manufacturing facilities in India, with a combined investment of INR 1.52 lakh crore. Notably, Tata Electronics is the only firm that is establishing two units, including India’s first major wafer fabrication plant. Additionally, Tower Semiconductor has partnered with the Adani Group to set up another chip manufacturing facility, with a proposed investment of INR 83,000 crore.
HCL and Foxconn have also submitted proposals to build semiconductor plants in the country. As part of its strategy to bolster semiconductor development, L&T Semiconductor Technologies is collaborating with prominent firms in the field. Kumar disclosed that the company has recently signed an agreement with IBM. This partnership will involve research and development collaboration focused on designing advanced processors.
The scope of the work is likely to encompass the design of processors for various applications, including edge devices, hybrid cloud systems, mobility, industrial, energy, and servers. L&T Semiconductor will focus on chip designs ranging from larger nodes, such as 130 nanometers, to smaller ones in the range of 2 to 5 nanometers. These chips are expected to find applications in mobile phones, electric vehicles, industrial electronics, and more.
Initially, the company plans to outsource the production of its chip designs to semiconductor foundries located outside of India. However, Kumar noted that if the costs prove reasonable, the company would explore the option of manufacturing these chips within India in the future. In terms of long-term planning, Kumar indicated that L&T Semiconductor will consider setting up its own semiconductor manufacturing units after reaching certain revenue milestones in different technology segments.
He provided an example, stating that establishing a 28-nanometer fabrication plant would require an investment of approximately USD 10 billion. To make such a facility financially viable, it would need to generate about USD 1 billion in annual sales. “Before we commit to building a silicon fab at 28 nanometers, we need to be confident that we can achieve that level of sales,” Kumar said.
The financial demands of producing smaller node chips are even greater. A fabrication facility for 2 to 5 nanometer chips, which are used in highly advanced technology such as mobile devices, could cost upwards of USD 100 billion. For this kind of fab to be profitable, Kumar explained that the business would need to bring in at least USD 10 billion in sales annually.
“We are not in the business of incurring losses. From a strategic planning perspective, we must reach those revenue levels before embarking on the construction of such advanced fabs,” he added. Kumar also discussed alternative semiconductor processes such as silicon carbide and gallium nitride. Silicon carbide is particularly suited for power electronics and electric vehicles, while gallium nitride is used in wireless technology and power applications.
These fabs, Kumar mentioned, would require a lower capital investment of between USD 500 million and USD 1 billion, and they would need to generate around USD 50 million to USD 100 million in sales annually to justify their establishment. “We are actively exploring all options,” Kumar said. “But it’s likely that fabs for technologies like silicon carbide and gallium nitride will come online earlier than those for 28 nanometer chips. Similarly, the most advanced 2-5 nanometer fabs will be developed later down the road as they demand a much larger investment.”
L&T Semiconductor Technologies is laying the groundwork for a significant presence in the global semiconductor industry. With its focus on designing products of strategic value, the company aims to strengthen India’s semiconductor ecosystem, reduce dependence on foreign technology, and ultimately establish its own manufacturing facilities once it achieves key revenue milestones.
L&T Semiconductor Technologies is a fabless chip design company specializing in advanced semiconductor solutions for various industries, including mobile, electric vehicles, and industrial electronics. Focused on innovation and strategic partnerships, such as with IBM, the company aims to reduce India’s dependency on foreign semiconductor technology by designing high-value products and eventually setting up manufacturing units.
