The semiconductor revolution: L&T Semiconductor is ready to lead India’s tech transformation

In a bold move signaling the rise of India as a tech manufacturing powerhouse, Larsen & Toubro’s semiconductor division, L&T Semiconductor Technologies, is set to launch its chip manufacturing operations within the next two years. The announcement comes as India doubles down on its ambitions to build a robust semiconductor manufacturing ecosystem, aiming to reduce its reliance on foreign-made chips and become self-sufficient in this critical sector.

L&T Semiconductor Technologies has revealed that the company is already deep into preparations, assembling teams and forging partnerships to ensure it can successfully navigate the challenges of semiconductor production. The company is tackling the complex semiconductor landscape by first focusing on designing cutting-edge chips before setting up its own manufacturing plants. According to industry experts, this strategy allows the company to avoid massive upfront investments in fabrication plants, focusing instead on product development that will eventually drive revenues and fund future infrastructure.

Experts note that L&T Semiconductor’s decision to enter the fabless semiconductor market is a strategic move that aligns with the Indian government’s broader push to become a key player in global tech. Semiconductor manufacturing is notoriously expensive, with capital investments for fabrication plants reaching into the billions of dollars. L&T aims to minimize risk by first reaching a revenue target of $50 million to $1 billion, depending on the technology, before committing to large-scale production in India.

Strategic partnerships leading the charge

The company’s roadmap includes major partnerships with global giants such as IBM. This collaboration is focused on developing advanced processors for next-generation devices, including edge computing devices, hybrid cloud systems, and industrial electronics. L&T Semiconductor is placing heavy emphasis on innovation, aiming to develop chips as small as 2-5 nanometers, which are critical for mobile phones and electric vehicles, as well as larger chips like 130-nanometer nodes used in various industrial applications.

Initially, L&T Semiconductor plans to outsource production to foundries outside India, with plans to shift to domestic manufacturing once the operation reaches the necessary scale. This cautious approach underscores the company’s understanding of the financial risks involved in chip production and the challenges India faces in scaling up its semiconductor capabilities.

India’s semiconductor race intensifies

L&T’s plans come at a time when India’s semiconductor sector is gaining significant momentum. Major players such as Tata Electronics, Micron, and Tower Semiconductor, along with Adani Group, are collectively investing over ₹1.52 lakh crore in semiconductor projects across the country. These investments are part of a broader strategy by the Indian government to boost the country’s technological capabilities and establish India as a semiconductor hub.

Industry experts suggest that India’s entry into semiconductor manufacturing comes at a critical juncture. With global supply chains disrupted in recent years, the need for local chip production has become more urgent. Companies like L&T Semiconductor Technologies are seen as essential players in this effort, not just because of their financial power but also because of their ability to drive innovation in a sector that has long been dominated by foreign firms.

Expert opinion: Why this matters for India

According to industry analysts, L&T Semiconductor’s efforts could have far-reaching implications for India’s technological independence. One expert notes that by focusing on fabless production, the company is mitigating the risk of overextending its resources while simultaneously laying the groundwork for eventual self-sufficiency in semiconductor manufacturing. This strategy is crucial, as it allows India to retain control over its technological destiny.

Experts also point out that this move places India on the map as a serious contender in the global semiconductor industry, an achievement that could have geopolitical ramifications. By developing indigenous semiconductor technology, India is reducing the risk of supply chain disruptions due to geopolitical tensions, particularly those affecting the semiconductor industry in East Asia.

A calculated move for the future

L&T Semiconductor Technologies’ entry into the semiconductor manufacturing sector is a calculated move that highlights the company’s understanding of both the risks and rewards involved. By taking a phased approach and focusing first on product development, L&T aims to build a strong foundation that will enable it to scale up its operations and compete on the global stage.

As the semiconductor race heats up in India, L&T Semiconductor Technologies is positioning itself as a key player, leveraging its strategic partnerships and innovative designs to establish a foothold in a sector that is vital to the future of technology. The company’s foray into chip manufacturing is not just a business decision; it is a crucial step towards making India a self-sufficient, tech-driven economy.