L&T Plans Entry into Electronics Manufacturing to Boost Make in India Push

According to various media reports, engineering powerhouse Larsen & Toubro (L&T) is considering entering the electronics manufacturing services (EMS) market and has already begun talks with the Tamil Nadu government for roughly 200 acres of property close to Chennai.

Following in Tata's footsteps, the $17 billion business, which already has affiliates in the electronics sector, wants to become a comprehensive player with end-to-end production capabilities.

As a supplier to Apple, Tata Electronics has chosen to use contract manufacturing. It's unclear at this point if L&T wants to follow suit or forge its own path. According to the persons quoted, L&T is expected to concentrate on components for these areas given its extensive experience in large-scale engineering, procurement, and construction projects as well as its position in strategic electronics through defence and aerospace operations.

L&T Future Business Plans

The semiconductor arm of the business, which has teamed up with a Foxconn entity, is simply one component of L&T’s bigger ambition. This opinion was supported by an analyst who added that, like the Tatas, L&T is not interested in entering the smartphone market. Analyst also said that their focus would be on segments where they can marry it with existing adjacencies, for instance, aerospace.

The company already has electronics-related divisions, such as L&T Precision Engineering & Systems, so it would make sense to grow into the EMS market. He went on to say that L&T may also look at industrial EMS. With Flextronics and Kaynes among the bigger companies with exposure to this market, industrial EMS provides scale but is not highly competitive. They might consider developing energy meters or even Internet of Things modules for the car sector. L&T would be a strong fit for this market because of its enterprise ties and large infrastructure projects.

L&T Focusing on Analogue Chips

L&T chairman SN Subrahmanyan told ET in August that the company's two-year-old chip design division employs 400 engineers, the majority of whom are headquartered in Bengaluru, with the remainder located in Austin, Munich, and Tokyo. Analogue chips, primarily in larger nodes like 28 and 48 nanometres, are the company's primary focus.

According to Subrahmanyan, the plan is to design the chip, create a proof of concept, and present it to potential customers. If it works, we'll hire someone to make the chips. We might be the first Indian business to completely design and market semiconductors internally.

"We have seven clients on board already," he stated. On October 14, Foxconn subsidiary Hon Young Semiconductor (HYS) and fabless company L&T Semiconductor Technologies (LTSCT) announced a long-term collaboration to jointly develop and supply high-voltage semiconductor wafers with voltages ranging from 650V to 3300V.

Wafer foundry services for silicon (Si) and silicon carbide (SiC) platforms are offered by HYS. The businesses had stated that they will engineer and manufacture wafers specifically designed for industrial and automotive applications using HYS' facilities in Taiwan.