L&T Semiconductor Technologies looks to build 3 fabs in India, contingent on co generating revenues of $1 billion in two to three years. Investments for fabs can be between $10-12 billion. L&T group’s newest business vertical looks to become a global MNC semiconductor player.

L&T Semiconductor Technologies (LTSCT) is planning to build three semiconductor fabs in India over the next five to 10 years with potential investments of $10-12 billion, as the L&T group’s newest business vertical aims to become a multinational semiconductor player.

“The vision is to become the first global company in semiconductors operating from India, headquartered here, with a footprint across US, Europe, Japan and India," chief executive officer Sandeep Kumar said in an exclusive interaction. "The centre of gravity for all the development and manufacturing will be in India.”

Contingent On Revenues

Kumar said the company’s transition from being a system-on-chip (SoC) design company like Qualcomm or Mediatek, which it is at present, to building chips in its own fabs will be contingent on generating revenues of $1 billion.

“Our goal is to generate enough line of sight to get $1 billion annual revenue, which could be within the next two, three years, then I can start building my factory or fab,” Kumar said, adding that it would need to produce and sell 500 million chips.

He highlighted that since the company was working on different technologies – high end silicon chips, and mid- to low-end silicon carbide and gallium nitride chips – three different fabs will be set up in the long run, entailing different levels of investments.

He noted that return on investments, as well as the availability of financial incentives from the Indian government at that time, will be key to determining the investments.

“For silicon, (investment) is $10 billion-plus. Silicon carbide is in the range of $1 billion-plus and then gallium nitride can be in the range of $500 million,” Kumar said, but added that the order book would have to be strong in order to operate the fab at full capacity as that would be the key requirement for making chips at globally competitive prices.

“On silicon, all the partner details are in place. On gallium nitride, it is halfway there, and silicon carbide I have 15 different discussions going on, so within the next three months we will have nailed down who will be working with,” Kumar added.

Six Deals In Line

As things stand, revenues will begin to flow in from the coming months as it expects to close six deals in the automotive space worth $150 million in the next two months, which will include orders from three major Indian players, while orders from three large European clients will come in by October this year, according to Kumar.

It will target automotive, energy and industrial sectors, and make mixed signal, smart power, smart analogues, smart sensing and smart RF solutions and SoCs. The company is operating across nodes and technologies, with silicon chips ranging between 40nm and 7nm for digital use being designed in-house and made by Taiwan’s TSMC.

Mixed-signal digital process for power and analogue chips, ranging between 130 nm and 28 nm, on silica are being made by Global Foundries in the US. Silicon carbide chips are being made by two Japanese partners while chips for radio frequency and power devices based on gallium nitride will be made by Global Foundries and Taiwan’s VIS Technologies, Kumar said.

He added that employee count has risen to 200 in the past six months and will go up to 500 by February 2025, across India, US, Europe and Japan.

Pivot To Technology

L&T’s semiconductor business was set up in 2023 with a capital outlay of ₹830 crore for fabless chip design, as part of the engineering-to-construction conglomerate’s pivot to becoming more technology-led under chairman and managing director S.N. Subrahmanyan, who took over the reins from A.M. Naik in 2017.

L&T has also entered data centres, electrolyser manufacturing, and battery energy storage businesses, all of which are next-generation high-tech businesses. Green businesses contributed half of the group’s standalone revenues in FY24.

While the semiconductor division was new in a market dominated by the likes of Qualcomm, NXP and others, Kumar said that L&T’s long-standing track record combined with the products it is co-developing with clients will help it win deals and ensure a robust sales pipeline.

“The vision is to become the first global company in semiconductors operating from India, headquartered here, with a footprint across US, Europe, Japan and India.”

Key Takeaways

L&T Semiconductor Technologies aims to establish itself as a global semiconductor player from India.

The company plans to build three semiconductor fabs with an investment of $10-12 billion over the next five to 10 years.

L&T’s transition from SoC design to semiconductor manufacturing hinges on achieving $1 billion in annual revenue.

Agencies