To accelerate their entry into the global semiconductor market, Indian firms are increasingly targeting overseas assets while simultaneously investing in domestic greenfield projects. This strategy allows them to quickly acquire technical expertise, establish credibility within global supply chains, and access skilled talent. Companies like Tata Electronics and Larsen & Toubro Semiconductor Technologies (LTSCT) are actively pursuing acquisitions of semiconductor fabrication units and outsourced semiconductor assembly and test (OSAT) facilities in countries with established ecosystems, such as Malaysia.
Tata Electronics, for instance, is reportedly exploring the acquisition of an OSAT facility in Malaysia, engaging in talks with several global semiconductor companies, including X-Fab, DNeX, and Globetronics. This move aligns with their strategy to build technical know-how and talent before launching chip assembly and packaging operations in India. By acquiring an operational facility in Malaysia, a country with a well-developed semiconductor industry, Tata Electronics aims to deepen its understanding of the industry and tap into a readily available skilled workforce. KC Ang, the president and head of Tata Semiconductor Manufacturing, is spearheading this initiative, bringing over three decades of experience in the foundry business to the table.
This approach offers several advantages. Firstly, it provides immediate access to global intellectual property, engineering talent, and operational workflows, which can significantly accelerate the development of India's domestic semiconductor industry. Secondly, acquiring established companies can help build credibility within global supply chains, a major challenge for new entrants. Thirdly, it addresses the acute shortage of trained semiconductor talent in India. While the Indian government has initiated programs to train engineers, the new fabs and OSATs require trained personnel immediately. Acquiring overseas companies provides access to a skilled workforce that can be leveraged to bridge this gap.
However, successful value extraction from these acquisitions depends on the acquiring firm's financial resources, patience, and ability to effectively integrate the new operations. For Indian conglomerates, the right acquisition can act as a "capability accelerator," providing immediate access to crucial customer relationships and established market positions.
In addition to pursuing acquisitions, Indian firms are also making significant investments in domestic semiconductor manufacturing. Tata Electronics is investing ₹91,000 crore in a greenfield chip fabrication unit in Dholera, Gujarat, and ₹27,000 crore to set up an OSAT plant in Morigaon, Assam. These investments demonstrate a long-term commitment to building a comprehensive semiconductor ecosystem in India.
The Indian government is actively supporting these efforts through various initiatives, including the India Semiconductor Mission (ISM) and financial incentives for semiconductor manufacturing and design. The government's "Make in India" and "Design in India" initiatives encourage investors and manufacturers to establish operations in India with government support. The ISM provides up to 50 percent of the project cost as fiscal support for setting up semiconductor fabs and display fabs.
These combined efforts – strategic overseas acquisitions and domestic investments, coupled with government support – are positioning India as a potential hub for semiconductor R&D and manufacturing. The country's strategic location, growing consumer base, rising demand, and supportive policies are attracting significant investments from both domestic and international players. While challenges remain, such as the need to further develop the semiconductor equipment industry and address the skilled talent gap, India's semiconductor ambitions are gaining momentum.
