L&T Semiconductor plans $10B fab, targets $1B revenue by 2026-27

L&T Semiconductor Technologies (LTSCT), a fully owned subsidiary of Larsen & Toubro, has put together a plan to invest over $10 billion in a silicon fabrication (fab) plant after it gains clear visibility by 2026-27 of hitting at least a $1 billion per annum revenue run rate by selling its own designed and patented chips and semiconductor products (manufactured by third parties) in both the Indian and global markets.

Speaking to Business Standard, Sandeep Kumar, chief executive officer of the company, said: “We have decided not to follow the foundry path like Taiwan Semiconductor Manufacturing Company (TSMC) and make chips for others; instead, we want to go down the product path. A fab plant will require an investment of over $10 billion. Even with subsidies, it will mean an investment of $1 billion.”

However, Kumar says that to recover this capital, the plant that will manufacture THE chips DESIGNED BY them must operate at 95 per cent capacity. This would require generating revenues of $1 billion per annum from product sales. “We will have visibility on our revenues by 2026-27 and then decide on building the plant by 2031.”

The company has also explored the potential of setting up compound fab plants powered by LIKE gallium nitride, GaN. Kumar says: “These plants cost around $1.5 billion, so you should have visibility of $150 million per annum in revenues. But at the moment, there is an oversupply in the market, which will constrain us if we are unable to take advantage of this situation.”

The one-year-old company is currently focusing on designing and selling its semiconductor products, with a focus on SoME KEY areas: LIKE radio frequency, and sensors — backed by an initial investment of $300 million.

Kumar explains: “We are not competing with Nvidia or Advanced Micro Devices but are entering segments where there is less competition, and it is not dominated by just one or two players. Instead, there are already 30 players, and there are niche areas where we can go in and compete.”

He also points out that the technology nodes required in these segments are not as aggressive, and the cost of development is lower. Of course, he notes, even the unit volume and revenue per product are smaller.

Kumar also mentions that the company is not entering large markets — like mobile and personal computers — where there are already established players offering semiconductors. It is focusing on the energy and telecommunications sectors and products designed by the company will be launched mid this year.

Currently, the company is manufacturing the chips it designs at third-party global foundries. However, Kumar says that they will give contracts to companies like Tata and various Outsourced Semiconductor Assembly and Test players once they begin commercial production in the country. Business Standard