Tata may have plan to help with semiconductor shortage: Sources

India’s Tata Group is in talks with three states to invest up to $300 million to set up a semiconductor assembly and testing unit, two sources familiar with the matter said, as part of the group’s push into high-tech manufacturing. . Sources said Tata is in talks with the southern states of Tamil Nadu, Karnataka and Telangana and is looking for land for an outsourced semiconductor assembly and test (OSAT) plant.

While Tata has previously said that it will enter the semiconductor business, this is the first time there has been news about the group’s foray into the sector and its scale. An OSAT plant packages, assembles and tests foundry-made silicon wafers, turning them into finished semiconductor chips. One of the sources said Tata has looked at some possible locations for the factory, with a site likely to be finalized by next month.

“While they (Tata) are very strong on the software side of things … hardware is something they want to add to their portfolio, which is very important for long-term growth,” the source said. The Tata group and three states did not respond to requests for comment.

Tata’s effort will boost Indian Prime Minister Narendra Modi’s ‘Make in India’ campaign to manufacture electronics, which has already helped the South Asian country become the world’s second largest smartphone maker. The Tata Group, which controls India’s top software services exporter Tata Consultancy Services (TCS.NS) and has interests in everything from autos to aviation, is planning to invest in high-end electronics and digital businesses, Its president N Chandrasekaran has said earlier. read more

Potential customers of Tata’s OSAT business include Intel (INTC.o), Advanced Micro Devices (AMD) (AMD.O) and STMicroelectronics (STM.BN). The source said that while the factory is expected to start operations by the end of next year and could employ 4,000 workers, availability of skilled workers at the right cost was critical to the project’s long-term viability.

“Once Tata starts up, the ecosystem will come around… so finding the right place is very important from the labor point of view,” the source said. Separately, Tata is already building a high-tech electronics manufacturing facility in the southern state of Tamil Nadu.

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