Larsen & Toubro Ltd. plans to invest more than $300 million to create a chip company, joining other Indian conglomerates in their push to develop a semiconductor industry in the world’s most populous country.
The tech-to-construction company will allocate these funds over the next three years to establish a fabless chipmaker. This venture will focus on designing and selling semiconductors, while outsourcing their production. According to Sandeep Kumar, head of L&T Semiconductor Technologies, the company aims to design 15 products by the end of this year, with sales expected to begin in 2027.
Both global and local companies are trying to capitalize on India’s initiative to build domestic semiconductor capacity and reduce costly imports, by leveraging government subsidies. The ongoing tensions between Beijing and Washington are prompting electronics manufacturers, including chipmakers, to diversify beyond China and Taiwan, positioning India as a potential beneficiary.
L&T’s investment, however, is modest compared to the outlays of leading fabless chipmakers such as Nvidia Corp. and Advanced Micro Devices Inc. The Indian company is focusing on products like power chips, radio-frequency semiconductors, and mixed-signal integrated circuits, rather than AI-driven graphics processing units.
“Automotive, industrial, and energy — these are the sectors we’ve chosen because they are undergoing significant transformation,” said Kumar. “There’s an opportunity to compete, succeed, and potentially capture the market.”
Semiconductors have become an essential resource globally, especially as the US-China trade war threatens to further increase the cost of chip imports. Several countries, including the US, Germany, Japan, and Singapore, are ramping up their domestic chipmaking efforts to secure a steady supply of these components, which are critical for technologies ranging from AI to electric vehicles.
L&T Semiconductor Technologies currently employs about 250 people, most of whom are chip designers. According to Sandeep Kumar, the company plans to double its workforce by the end of 2024.
Kumar also mentioned that the company has urged the Indian government to provide subsidies or incentives specifically aimed at supporting chip design for large companies. However, L&T Semiconductor Technologies will not seek external funding and will remain within the financial support of the L&T group.
Prime Minister Narendra Modi’s administration has introduced a $10 billion program aimed at attracting chipmakers and their suppliers to India. This initiative has already prompted the Tata Group to build the country’s first major chip factory, while US-based memory maker Micron Technology Inc. is establishing a $2.75 billion assembly facility in Gujarat, Modi’s home state. Additionally, the Adani Group is planning to construct a chip plant in partnership with an Israeli company.
India remains open to expanding the $10 billion semiconductor fund. This was confirmed by the head of a state agency responsible for approving funding for chip projects during a public briefing earlier this week.