From Tata Group to HCL: Here’s why the decision of some top Indian companies to enter the semiconductor fray is good news
You could call it the Corona effect. Or say it is the right place and time. On January 18 this year, it was not surprising when the HCL Group said it was partnering with Taiwan’s Foxconn to set up a facility to test and package semiconductors designed by third parties.
HCL Group isn’t the only Indian conglomerate trying to get into OSATs. The salt to software Tata group and CG Power, which is into design and manufacturing of products related to power generation, received government approval to set up testing and packaging plants in the country on February 29.
The Union Cabinet also approved India’s first chip fab proposal, that of the Tata group in collaboration with Powerchip Taiwan, which will come up in Gujarat’s Dholera at an estimated investment of Rs 27,000 crore. Besides, the Hiranandani Group, which made its billions in real estate, is also in the game. All of them spied an opportunity and are trying to make the most of it.
That opportunity has come because the Covid-19 lockdowns in 2020 disrupted supply chains of everything, from the potato chips that fed a locked-in population to the silicon chips or semiconductors that go into smartphones, laptops, game consoles and even cars and buses.
For the Tata group-which already operates in various sectors that heavily rely on semiconductors, such as automobiles and electronics-stepping into the semiconductor ecosystem promises cost benefits and greater control over products.
In the case of power electronics player CG Power-which serves end markets like automotive, industrial, and transport and logistics-this will help extend its value chain by vertically integrating the most important and strategic component of power electronics, semiconductor chipsets. And it is timely because all three of its end markets are poised to grow exponentially in India over the next decade.
