L&T Semiconductor Technologies Eyes Manufacturing Launch in Two Years, Sets Revenue Milestones

• ByStartupStory     |    September 30, 2024

L&T Semiconductor Technologies, a fabless chip company, expects the manufacturing of its semiconductor products to commence within the next two years, according to its CEO, Sandeep Kumar. The company plans to establish its own chip manufacturing plants once it achieves a revenue threshold ranging from USD 50 million to USD 1 billion, depending on the semiconductor technology.

During a recent interview with PTI, Kumar outlined the company’s roadmap, which includes handling up to 15 different product designs in parallel. “We will have the full force ready in the next six months. By the end of this year, we will be able to handle 15 parallel product designs. Since we have half the team, roughly six product designs have already started. Those designs will launch sometime by the end of next year, and production will start in two years from today,” he stated.

Building Indigenous Chip Design Capability

Kumar emphasized the importance of starting as a fabless chip company to reduce India’s dependency on foreign firms. He highlighted the strategic value of building products domestically to safeguard India’s semiconductor industry from external control.

“First, we need to build products. We need to figure out how to sell those products that are of true strategic value. Tomorrow, you build a factory, and it is building somebody else’s products from the outside. You can always shift to another fab, and that foundry can go belly up. There’s always that risk,” Kumar said.

He also presented a hypothetical scenario where a developed country could halt sharing technology with India, potentially crippling the domestic technology sector. “If an indigenous company makes a product, then it is assured that the product is strategically retained in India. It cannot be controlled or stopped by some other country,” he added.

Semiconductor Industry Growth in India

India’s semiconductor landscape is evolving rapidly, with major investments underway. Companies like Tata Electronics, Micron, CG Power, and Kaynes Technologies are collectively investing Rs 1.52 lakh crore in semiconductor units. Tata Electronics is setting up two units, including the country’s first large wafer fabrication plant. Meanwhile, Tower Semiconductor is collaborating with the Adani Group on another chip manufacturing unit, with a proposed investment of Rs 83,000 crore. HCL and Foxconn have also submitted proposals for semiconductor plants.

L&T Semiconductor Technologies is also collaborating with global leaders in the semiconductor space. The company recently signed a research and development agreement with IBM to design advanced processors. The collaboration will cover areas such as mobility, industrial applications, energy, and servers. “The scope of this work could include processor design for edge devices and hybrid cloud systems,” Kumar said.

Future Plans and Production Strategy

Kumar revealed that the company is working on chips ranging from 130 nanometer (nm) nodes to smaller, more advanced nodes like 2-5 nm, which have applications in mobile phones, electric vehicles, and industrial electronics. L&T plans to initially outsource production to semiconductor foundries abroad and may shift production to India if costs permit.

The company has set revenue targets as a prerequisite for setting up its semiconductor manufacturing units. “A 28-nanometer fab and above is roughly USD 10 billion. In order to turn that into a profitable business, you need to have sales of roughly a billion dollars per year from that fab. We need to achieve that kind of sales outlook with high confidence before we decide to embark on setting up a silicon fab at 28 nanometers,” Kumar explained.

Regarding the possibility of smaller fabs, Kumar said a 2-5 nm fab would require a USD 100 billion investment and necessitate USD 10 billion in sales to become profitable. However, the company is exploring other processes such as silicon carbide and gallium nitride, which have lower investment requirements. “The cost of setting up those fabs is somewhere between half a billion and a billion dollars. That means those can need about USD 50 million to USD 100 million in sales a year in order to justify that,” Kumar added.

He concluded by saying that L&T expects to move into silicon carbide and gallium nitride chips earlier, while 28 nm and 5 nm fabs will follow in the future. “We are looking at all options, but we think those two will occur earlier, 28 nanometers will occur later, and the five nanometers will occur even later.”

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