In a bid to grow the recently-launched semiconductor business, Larsen & Toubro (L&T) will look for acquisitions companies with existing client base in chip designing.
R Shankar Raman, who has been elevated as President, Whole-time Director & Chief Financial Officer of Larsen & Toubro, told businessline that such acquisitions will not be for technology but aimed at generating business. “We could look at acquisitions of entities that are already working on specific chip design projects. We are not looking for technology partners because that will constrain us to certain technology and certain markets,” Raman said.
The Mumbai-headquartered company has invested ₹850 crore in setting up a wholly owned subsidiary - L&T Semiconductor Technologies.
Raman said that L&T is in the process of assembling a team for the new business. “We will not venture into manufacturing, fab foundry, test packaging but we are into chip design. We want to remain technology agnostic. We want to cater to energy, communication, automobile companies and wider industrial applications,” Raman said.
Further, the company is aggressively setting up its team in the international market for the ramping up of the semiconductor business.
“Our effort is to identify teams that can work on designing the chips and that can break ground with product and original equipment manufacturers. The business development and marketing team is being assembled in the USA, Europe and Japan. These are the larger markets that will order from us in addition to India,” he said.
Govt subsidy
While the government in its interim budget allocated ₹6,903 crore for semiconductors, Larsen & Toubro (L&T) will apply for a subsidy if it is extended to designing.
“If the government subsidy gets extended to chip design we will apply for it. Though we have a strong balance sheet and in some way need not depend on subsidies, the overall economics makes the product more competitive and we could scale up faster using the subsidies,” he added.
Semiconductor ecosystem consists of three parts. Designing, manufacturing and testing. India’s semiconductor ambitions is picking up steam with several companies announcing big ticket investments. The Tata group has announced placed to set up a semiconductor fabrication unit. Us-based Macron has also announced investments for semiconductor testing. As of now, multinational companies like Qualcomm are doing chip designing in India.