Tata Sons Chairman Natarajan Chandrasekaran lately confirmed their much-anticipated entry into the semiconductor house. In an interview with Nikkei Asia, Chandrasekaran revealed that the conglomerate has arrange Tata Electronics in a bid to faucet into the rising semiconductor house in India.
The conglomerate’s entry into the semiconductor house comes at a time when the Indian authorities is pushing to make India a semiconductor manufacturing hub.
Whereas it was anticipated earlier that Tata would look to arrange a FAB within the nation, the plan proper now could be to arrange an Outsourced Semiconductor Meeting and Take a look at (OSAT). Reviews declare that Tata is at the moment scouting for land in three states—Tamil Nadu, Karnataka, and Telangana.
Tata Electronics was arrange in 2020, and so they employed Raja Manickam because the CEO of Tata Electronics OSAT India in 2021.
In Partnership
Establishing a semiconductor meeting and take a look at unit isn’t a straightforward process. Tata is reportedly planning to spend round USD 90 billion within the subsequent 5 years to arrange the deliberate OSAT unit.
Nonetheless, since Tata doesn’t have ample experience in semiconductors, the route Tata is planning to take is to arrange an OSAT unit in India in partnership with a overseas participant. Tata may probably rope in prime gamers equivalent to ASE, Amkor, and JCET, amongst others.
Earlier this 12 months, Vedanta had introduced its entry into the semiconductor house. The conglomerate, in partnership with Taiwanese electronics manufacturing big Foxconn, signed a Memorandum of Understanding with the Authorities of Gujarat to arrange a semiconductor manufacturing unit within the state.
Tata can also be anticipated to observe the identical path and arrange its OSAT. On this regard, Chandrasekaran revealed that the group is already in dialogue with a number of gamers.
Why OSAT?
As a substitute of establishing a semiconductor fabrication unit, Tata introduced their determination to arrange an OSAT unit as a substitute, however why? Like a FAB, the OSAT unit additionally performs an important function within the semiconductor provide chain. Additional, establishing an OSAT unit is relatively cheaper to establishing a FAB.
Whereas semiconductor FABs present solely 50% of the companies which can be needed to show a product design into actuality, the remainder depends on OSATs which handle the testing and packaging of the silicon chips made on the FABs earlier than they’re shipped to the market.
Establishing an OSAT unit would imply that Tata must make investments closely in gear and processes that allow testing of several types of wafers and components moreover offering high-tech, research-driven packaging options.
It’s noteworthy that the excessive value related to it’s the purpose why corporations select to outsource the entire course of.
Gunning for self reliability?
Establishing an upstream semiconductor manufacturing course of plant or FABs is much more difficult, each technologically and financially, compared to a downstream strategy of meeting and testing or an OSAT unit.
Nonetheless, Tata has not closed the door on a doable fabrication unit sooner or later. The conglomerate’s chairman has, in reality, revealed that they might finally arrange an upstream chip fabrication platform down the road.
This might go a good distance in making the conglomerate self-reliant when it comes to semiconductors, a scarcity of which, in reality, value the enterprise dearly.
We witnessed the worldwide semiconductor crunch because of the COVID-19 pandemic together with the lockdown in China that impacted Tata Motors’ earnings and resulted in consequent manufacturing cuts. The influence was dangerous sufficient for Tata Motors to halt its plans briefly.
Therefore, establishing its personal FAB together with an OSAT unit may show to be monumental for Tata as a result of it could not need to depend on the worldwide provide chain for semiconductors.
In reality, as a way to be self-reliant, Tata Motors has partnered with Japanese chip producer, Renesas Electronics, to design and develop semiconductors. The partnership may show to be pivotal for Tata when it comes to designing chips for the upcoming Jaguar Land Rover electrical vehicles.
Moreover, the necessity for semiconductors is not only restricted to Tata Motors. The conglomerate has a number of companies and operates information centres in 44 areas throughout the globe. Tata additionally has a robust presence within the aviation sector with three manufacturers underneath its wing—Vistara, AirAsia, and Air India.
Additional, there isn’t a semiconductor business in India but. The time is thus excellent for Tata to ascertain itself within the house and cater to the ever-expanding Indian electronics market.
