L&T To Invest $300 Million To Set Up Chip Designing Company As Semiconductor Sector Gains Traction In India

The construction major Larsen and Toubro (L&T) is set to debut in the semiconductor industry with an investment of $300 million over the next three years to establish a chip designing company.

The company plans to set up a fabless chipmaker, which designs and sells semiconductors but contracts out their production to other Indian conglomerates.

Head of L&T Semiconductor Technologies Sandeep Kumar said that the company will design 15 products by the end of this year and start selling them in 2027.

However, the L&T's investment plan is modest in comparison to with outlays by other leading fabless chipmakers like Nvidia Corp and Advanced Micro Devices Inc.

L&T will design chips focusing on automotive, industrial and energy sectors as Kumar believes these sectors are going through very heavy transformation giving a space to the emerging company.

"There is space to compete, succeed and even capture the market," Kumar said explaining that L&T will not design AI-enabling graphics processing units, Economic Times reported.

L&T Semiconductor Technologies currently has 250 employees, a majority of them chip designers. The company will double its strength by the end of 2024, Kumar added.

The semiconductor unit will be funded by L&T group. It has also urged the Narendra Modi government to provide subsidies or incentives for chip designing.

India currently has a Production-Linked Incentive (PLI) scheme for chipmaking which has helped in setting up fabrication units like that of Tata.

L&T’s semiconductor division was established in 2023 with a capital outlay of Rs 830 crore for fabless chip design, as part of the conglomerate’s strategic shift towards technology.