L&T plans to establish a fabless semiconductor chip design venture, investing ₹830 crore in the venture

1 Nov 2023 , 11:47 AM

By establishing a subsidiary, engineering firm Larsen and Toubro (L&T) is venturing into the field of fabless semiconductor chip design, the engineering major announced on Tuesday.

According to L&T Chief Financial Officer R Shankar Raman, the company has approved an investment of Rs 830 crore to establish a wholly-owned subsidiary that will be involved in the business of fabless semiconductor chip design and product ownership rather than manufacturing.

We currently view the fabless semiconductor chip design industry as a high-tech, low-investment venture. Shankar Raman stated, ‘We will have an R&D centre for fabless semiconductor chips, which may be in the US,’ following the business’s Tuesday earnings call. He continued by saying that because design is patentable and has the highest potential for value, the corporation has chosen to remain in that area.

The company claimed to have some domain capability in the IT & Technology Services (IT&TS) Segment due to its membership in the segment.

‘In reality, we were hoping to take advantage of the growing semiconductor market. ‘We thought that given our brand and our engineering capability, we should be able to do that, even though multinationals are taking advantage of the Indian talent base,’ Shankar Raman stated. ‘The global market is the play area, so the company might have to have some marketing firepower in the US, Europe, and Japan, mostly focused on automobile and industrial chip designing.’ ‘That’s the closest to our engineering capability…so at the moment it will be less investment less no manufacturing, but getting our positioning assessed for the design.’

Compared to Rs 2229 crore in the second quarter of the previous fiscal year, net profit was Rs 3,223 crore.

According to the value of projects currently being worked on, the company is at the top of the list of foreign EPC contractors operating in the MENA area. This demonstrates our capacity as a globally dispersed, diverse conglomerate,’ Subrahmanyan said, adding that the company is cautiously hopeful about the immediate future in light of recent geopolitical developments.

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