The global microchip shortages have witnessed several companies join hands to share manufacturing facilities and ship this essential hardware to phone-makers and those assembling computing devices. Now we hear that one of India's large business houses plans to set up a semiconductor assembling unit in the country.
According to a wire agency report, the Tata Group is in talks with at least three state governments in India to invest $300 million (approx. Rs.2,245 crore) towards a new semiconductor assembly and testing unit. The states in question are Tamil Nadu, Karnataka and Telengana, all in the southern part of the country.
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From software to hardware
The Tata Group, which operates a variety of businesses ranging from cars and trucks to software and hi-tech electronics, recently acquired stake in Tejas Networks, a company that manufactures telecom equipment. The group has also shared its plan to enter online retail through a digital super app and acquired existing brands in the grocery, healthcare and fitness space.
The group owns India's largest software export operation under the TCS brand in addition to recently acquiring India's national aircraft carrier Air India.
The latest business interest is in line with the conglomerate's push towards hi-tech manufacturing. Tata Sons Chairman N Chandrasekaran had stated recently that the group had set up a business to seize the opportunity in high-tech manufacturing of electronics, precision manufacturing, assembly and testing, and semiconductors.
Once set up, the semiconductor assembly unit would function as a captive plant for Tata Motors and Tata Power while the agency claimed quoting an unnamed source that other potential clients could include the likes of Intel and AMD. They said the factory could start operations late in 2023 and employ more than 4,000 workers.
What prompted Tatas to move in?
In the past, the Tata Group has spoken of its intention to generate global business via exports and the current microchip and semiconductor shortage appear to have nudged them forward. Since these are critical components in consumer electronics such as smartphones and laptops, the group saw the opportunity to expand its existing exposure to developing hardware.
One of its group companies, Tata Elxsi, provides design and development services for automotive, communications, healthcare and broadcast services. There is a good chance that the same entity could take up the semiconductor assembly business.
The latest move by the Tata Group ties in with the federal government's schemes that provide export-linked benefits to companies in the manufacturing industry. The Narendra Modi government's much-touted productivity-linked incentive (PLI) scheme has resulted in the country's smartphone exports crossing $1.5 billion.
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