In Short:
Larsen & Toubro (L&T) is looking to grow its new semiconductor business through acquisitions of companies with chip design projects. R Shankar Raman, President of L&T, says they will focus on expanding business rather than technology. L&T has invested ₹850 crore in a subsidiary for chip design. The company is setting up teams in the USA, Europe, and Japan to cater to global markets. They are also considering applying for government subsidies for chip designing.
Innovative Approach to Semiconductor Growth
In an exciting move to expand their semiconductor business, **Larsen & Toubro (L&T)** is on the lookout for acquisitions of companies with an established client base in chip designing. This strategic decision aims to boost their presence in the semiconductor industry.
Acquisitions for Business Expansion
R Shankar Raman, the newly appointed President, Whole-time Director & Chief Financial Officer of **Larsen & Toubro**, expressed that the focus of these acquisitions will not be on technology itself, but on enhancing business opportunities. He mentioned, “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.”
The **Mumbai**-based company has already invested ₹850 crore in establishing a wholly owned subsidiary – L&T Semiconductor Technologies, showcasing their commitment to this new venture.
Expanding Presence in International Markets
**L&T** is currently in the process of building a strong team to support their semiconductor business. Raman clarified, “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.”
Additionally, the company is aggressively expanding its team in key international markets to bolster their semiconductor operations. Raman detailed, “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, focusing on these major markets along with India.”
Exploring Government Subsidies
With the government allocating ₹6,903 crore for semiconductors in the interim budget, **Larsen & Toubro (L&T)** is keen on applying for subsidies, especially if it extends to chip designing. Raman emphasized, “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.”
India’s semiconductor ecosystem comprises of three essential parts – designing, manufacturing, and testing. With the semiconductor industry gaining momentum, companies like **L&T**, the Tata group, and **Qualcomm** are making significant investments in this sector, showcasing the promising future of semiconductor technology in the country.
