L&T Group's Semiconductor Arms Mulls China Play by FY27; Here's Why

Larsen & Toubro Group’s semiconductor arm, L&T Semiconductor Technologies (LTSCT), is eyeing to enter the Chinese market by the next financial year. The company is planning to not only produce chips but also sell them to Chinese companies, the Business Standard reported. The company is likely to take a final call on this by the end of the year. 

“China is a huge market and we need volumes in the semiconductor business, in which what we sell is less than a dollar apiece. While China, the United States, and Europe have volumes, India can export,” CEO, LTSCT, Sandeep Kumar, told the Business Standard. “For a while, we have been looking at going into China. The plan is to study the matter by the end of the year and then decide. If there’s a positive outcome, we will start next financial year; we will set up operations to sell there and set up supply chains,” Kumar added. 

The company is primarily in the business of designing semiconductor chips, it might outsource production to semiconductor fabs in China and is likely to utilise that as a base for supplying to other global markets.

The company currently follows a fabless model with no immediate plans to establish fabrication (fab) or outsourced semiconductor assembly and test (OSAT) plants. Presently, the semiconductor firm is reportedly focusing on product development, customer acquisition, and selective acquisitions. 

The 2023-founded semiconductor company is likely to go for the public listing only after crossing $500 million in revenue, the CEO added. 

The company’s proposed China expansion has come around the time when the government is aggressively pushing to strengthen India’s semiconductor ecosystem. The government already has a semiconductor mission with an outlay of ₹76,000 crore. The size of the Indian semiconductor market is projected to increase from $38 billion in 2023 to $100-$110 billion in 2030.