Fabless chip company L&T Semiconductor Technologies expects production of semiconductor products designed by it to begin in the next two years, the company’s top executive said.
While talking to PTI, L&T Semiconductor Technologies CEO Sandeep Kumar said that the company will set up its own chip manufacturing plants after achieving revenues in the range of USD 50 million to USD 1 billion for different semiconductor technologies.
The company is building teams to manage about 15 different products in parallel, and is already halfway through that journey, he added.
“We will be fully operational in the next six months. By the end of this year, we will be able to handle 15 similar product designs. Since we have half of the team, about six product designs have already started. Those designs will be launched by the end of next year, and production will start two years from today,” said Kumar.
He said the company is of the view that starting as a fabless chip firm is important for India to reduce its reliance on foreign firms.
“First, we need to build products. We need to find out how to sell those products that have real strategic value. Tomorrow, you will build a factory, and build someone else’s products outside. You can switch to another. fab, and that stock can go up, there is always that risk,” said Kumar.
He also talked about a hypothetical situation where if a developed country decides to stop sharing technology with India then the entire technology sector in the domestic market may come to a standstill.
Kumar said that when an indigenous company makes a product, it is ensured that the product is efficiently maintained in India.
“It cannot be controlled or blocked by another country, it does not mean that what others are doing is wrong. In the chip industry there is a foundry business where you build a factory, you also find other customers who want to use that industry. They will have their own challenges, I am sure they will find them,” said Kumar.
Tata Electronics, Micron, CG Power and Kaynes Technologies are setting up semiconductor units in India with a combined investment of Rs 1.52 lakh crore.
Tata Electronics is the only company with two manufacturing units, including the country’s first large-scale wafer manufacturing plant.
Besides, Tower Semiconductor is partnering with Adani Group to set up another chip manufacturing unit with a proposed investment of Rs 83,000 crore.
HCL and Foxconn also submitted a proposal for the establishment of a semiconductor plant.
Kumar said that to build on semiconductor products, L&T is in talks with several leading firms in the space and has recently signed an agreement with IBM.
L&T Semiconductor’s agreement with IBM includes engaging in collaborative research and development to design advanced processors.
The scope of this work can include processor design for edge devices and hybrid cloud systems, as well as areas such as mobility, industrial, energy, and servers.
Kumar said the company will work on chips in the nanometer (nm) range to 130 nanometer nodes and even smaller nodes of 2 to 5 nm that can be used in mobile phones, electric vehicles, industrial electronics etc.
It will first source the chips produced at a semiconductor acquisition facility abroad and explore its production in India if the cost is reasonable, he added.
Kumar said the company will look at establishing its semiconductor units based on different technologies after earning a small amount of revenue from the right components.
“The fabric at 28 nanometers and above is about USD 10 billion. To turn that into a profitable business, you need to sell about a billion dollars a year from that fabric. We need to achieve that kind of sales perspective with a lot of confidence before we decide to set up a fabric for silicon at 28 nanometers,” he said.
Kumar said the 2-5 nm fabric would require an investment of USD 100 billion.
“You need to have a sales volume of USD 10 billion to make a profit. We are not in the business of managing losses. At least from a planning point of view, we need to be at that point (of revenue),” he said. .
Kumar said there are two other processes known for silicon carbide and gallium nitride for semiconductors. Silicon carbide is used for electric power, and EVs and gallium nitride chips are used for wireless and power products.
“The cost of setting up those fabrics is between half a billion and a trillion dollars. That means those would need about USD 50 million to USD 100 million in sales per year to justify that. We’re looking at all options, but we think these two will happen in the front, nanometers 28 will happen later, and five nanometers will happen even later,” Kumar said.
