Tata Electronics Bets Big on Chips, Targets $30 Bn in Five Years

Tata Sons' wholly-owned subsidiary Tata Electronics is emerging as one of India's fastest-growing companies, riding a wave of semiconductor and electronics manufacturing investments with an ambition to become a $30 billion business within five years.

The company has grown from a modest ₹400 crore revenue base to a ₹1.3 lakh crore annual run rate in just four years, surpassing group company Titan in the process. It now ranks among the top five Tata Group companies by revenue and has turned profitable while continuing to invest aggressively in future capabilities.

"We are in the right business at the right time," Randhir Thakur, CEO and Managing Director of Tata Electronics, told the Economic Times.

Thakur took charge in 2022 after Tata Sons chairman N Chandrasekaran personally persuaded him to lead the business from scratch. The broader context was the post-Covid global push for more resilient and localised supply chains, which prompted the Tata Group to identify semiconductors as a key future growth area.

Since then, the company has expanded rapidly on multiple fronts. Its electronics manufacturing services (EMS) operations now span facilities in Hosur, Tamil Nadu, and Karnataka, including the acquired Pegatron and Wistron plants.

On the semiconductor side, Tata Electronics is building India's first chip fabrication plant in Dholera, Gujarat, at a cost of ₹91,000 crore, alongside an outsourced semiconductor assembly and test (OSAT) unit in Assam worth ₹27,000 crore. Central and state government subsidies are expected to cover approximately 70% of the total investment, significantly reducing the financial burden on the company, Thakur said.

The Dholera fab has already secured commitments for 70% of its capacity from an impressive roster of global partners, including PSMC, Intel, Qualcomm, Analog Devices, Bosch, Rohm, and Tokyo Electron, a sign of growing international confidence in India's semiconductor ambitions.

To manage risk, Tata Electronics has deliberately focused on mature technology nodes, 28nm, 40nm, 55nm, 90nm, and 130nm, rather than chasing cutting-edge chip technology. Thakur noted that these nodes collectively address around 60% of global chip demand, a share he expects to remain robust as applications in automotive, industrial, and other sectors continue to grow.

On the financial side, Thakur said the company's capital needs are well covered. Funding for the fab and packaging operations has been secured, while the EMS business is increasingly self-funding through internal cash generation. He added that returns on invested capital are in line with what Tata Sons expects from businesses of comparable size.

Despite the optimism, the company has not been without scrutiny. Tata Trusts chairman Noel Tata reportedly flagged Tata Electronics as an area of concern at a recent Tata Sons board meeting, though the company has not commented publicly on the matter.