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Tata Sons to make semiconductors, leveraging opportunity arising out of global chip shortage

The in-house semiconductor manufacturing facility in Hosur will ensure supplies to group companies Tata Motors and Tata Power and open prospects for catering to local and global markets

August 10, 2021 / 07:15 PM IST
N Chandrasekaran said that Tata Group has set up a business to seize the promise of high-tech manufacturing of electronics, precision manufacturing, assembly and testing and semiconductors in the medium term [Image: Shutterstock]

N Chandrasekaran said that Tata Group has set up a business to seize the promise of high-tech manufacturing of electronics, precision manufacturing, assembly and testing and semiconductors in the medium term [Image: Shutterstock]

Tata Sons plans to start making semiconductors at its Hosur facility under Tata Electronics, taking advantage of a global shift in supply chain dynamics and a worldwide chip shortage that may continue into next year.

“At the group, we have already set up a business to seize the promise of high-tech manufacturing of electronics, precision manufacturing, assembly and testing, and semiconductors in the medium term,” chairman N Chandrasekaran said.

The world’s biggest chipmakers have warned that a worldwide shortage of semiconductors – used in products ranging from smartphones and laptops to cars – will continue into 2022. The pandemic has stressed semiconductor supplies across the globe.

In the first phase, the Hosur facility will focus on hi-tech electronics manufacturing and is likely to plan semiconductor manufacturing in the next phase, a Tata Sons spokesperson said. The Hosur facility has started the process of hiring about 18,000 employees, 90 percent of whom are likely to be women.

Chandrasekaran said global supply chains, currently heavily dependent on China, will see a big change in the post-pandemic world as businesses shift their reliance to other countries.

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Opportunity in shortage

Tata Motors recently projected losses at overseas unit Jaguar Land Rover due to the shortage of semiconductors, which had curtailed production of cars. The entire auto sector faces the heat of the chip shortage.

The in-house semiconductor manufacturing facility at Tata Sons will not only assure supplies for group companies Tata Motors and Tata Power but will also open prospects for catering to local and global markets.

Semiconductor market overview

Taiwan is the world’s biggest maker of semiconductors, with a market share of over 50 percent. Taiwan Semiconductor Manufacturing Company, the world’s biggest contract maker of semiconductors, makes chips for Apple, AMD, Nvidia, MediaTek and Qualcomm, among others.

Also Read: Tatas to foray into semiconductor manufacturing--8 key things to know

Semiconductor manufacturing involves building chipsets and other such metal-oxide-semiconductor devices used in integrated circuit chips like computer processors, microcontrollers and memory chips typically present in everyday electrical and electronic devices.

A chip, an essential component of gadgets, consists of millions of transistors and resistors that make computing possible. The process of making it has become more complex as the world gets smarter. Chips are made at cutting-edge facilities known as semiconductor fabrication units or fabs, which have to be retooled every couple of years to stay competitive and it costs big money.

Towards new businesses

Tata Sons has been quick to pivot to new-age businesses that hold promise in the post-Covid era. It recently acquired Tejas Networks for a larger share of telecom equipment manufacturing as the sector prepares for 5G.

Tata Digital, with ambitions of building a super app, recently acquired e-commerce businesses including BigBasket and 1mg, and invested in Curefit.

While unveiling the group’s plan to enter the semiconductor business, Chandrasekaran stated, “The Tata group has already set up a business to seize the promise of high-tech manufacturing for electronics. A domestic electronics industry could unlock $1 trillion in GDP and create millions of jobs.”
Nisha Poddar is an Editor-M&A, CNBC-TV18
first published: Aug 10, 2021 07:15 pm

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