Larsen & Toubro Plans $100 mn Investment in Fabless Semiconductor Chip Design Business

Larsen & Toubro (L&T), a prominent player in the engineering sector, has announced a substantial investment of up to Rs 830 crore ($100 million) to establish a fabless semiconductor chip design subsidiary. This strategic move is set to contribute significantly to India’s ambitious plan to establish itself as a semiconductor hub.
BE SemiconductorDuring L&T’s quarterly earnings call, R. Shankar Raman, the company’s Chief Financial Officer, revealed their intention to delve into the design of fabless semiconductor chips in India.

Shankar Raman emphasized the value of this approach, stating, “We have decided to stay at the design end because it can be patented and will be most valuable.” The L&T board has given its approval for the creation of a wholly-owned subsidiary dedicated to fabless chip design.

Industry experts have lauded L&T’s shift into fabless semiconductor chip design as a notable change in the company’s business focus. Prabhu Ram, Head of the Industry Intelligence Group at CMR, emphasized the potential for creating patented fabless chip designs and the importance of intellectual property in a high-demand market. He noted that if executed successfully, L&T could make a significant impact in the competitive semiconductor landscape, IANS reports.

L&T’s strategy in this endeavor is to concentrate on the “low investment” part of the semiconductor supply chain. Raman explained, “We believe it will take a lot to compete in the (semiconductor chip) manufacturing space with the likes of Chinese, Taiwanese, and Korean companies, so that is not an area we are targeting at the moment.”

At the governmental level, India is considering ten applications from semiconductor manufacturers as part of a Rs 76,000 crore incentive scheme. These applications encompass proposals for setting up silicon fabs, compound semiconductor fabs, and chip packaging facilities. It’s worth noting that a fabless semiconductor company specializes in designing and creating semiconductor chips without having in-house manufacturing facilities.

In a significant development, the India Semiconductor R&D Committee recently submitted a report on the India Semiconductor Research Centre (ISRC) to the Ministry of Information Technology. The ISRC is expected to play a pivotal role in India’s growing capabilities in semiconductor technology, similar to renowned institutions like Europe’s Interuniversity Microelectronics Centre (IMEC), Taiwan’s Industrial Technology Research Institute (ITRI), and MIT Micro-electronic labs in the United States. These institutions have been at the forefront of pioneering cutting-edge semiconductor technologies.

Union Minister of State for Electronics & IT, Rajeev Chandrasekhar, highlighted India’s renewed focus on the semiconductor ecosystem, stating, “After being absent from the semiconductor ecosystem for decades and missing many opportunities, we are now playing catch up.” The ISRC aims to foster collaboration between industry, academia, and government to nurture a vibrant semiconductor ecosystem, bridging the gap between research and manufacturing.

This initiative is part of the Indian government’s commitment to catalyze the semiconductor manufacturing ecosystem with an investment of Rs 76,000 crore made in December 2021. In a relatively short period, India has witnessed the construction of its first semiconductor plant in Gujarat, operated by US-based Micron, along with an influx of manufacturing proposals and the establishment of eight chip designing startups in the country. India’s aspirations to become a semiconductor powerhouse are steadily gaining momentum.