Tata Electronics Eyes Malaysia Entry with Strategic Chip Fab Buyout

Global semiconductor companies X-Fab, DNeX, and Globetronics are reportedly in negotiations with Tata Electronics to purchase a fabrication or outsourced semiconductor assembly and test (OSAT) facility in Malaysia.

According to a media report, the deal will be spearheaded by KC Ang, the recently appointed president and head of Tata Semiconductor Manufacturing. For those who do not know, Tata Electronics' semiconductor foundry is called Tata Semiconductor Manufacturing.

According to the report, DNeX's SilTerra facility and Globetronics are two of the top candidates to be purchased by Tata Electronics.

Acquisition Aims to Further Strengthen Tata Group

According to the article, the acquisition is intended to increase the Tata Group's expertise and talent pool before it enters the Indian semiconductor assembly and packaging market. The Indian semiconductor industry is seeing significant investments from the Tata Group.

With an investment of $11 billion, it is constructing India's first semiconductor factory in Dholera, Gujarat. It is also spending $3 billion on a plant in Assam that will be used for semiconductor chip production and testing. OSAT activities will be the main emphasis of this initiative in Assam.

Malaysia is emerging as a key site to become one of the world's robust pillars in the global semiconductor chip supply chain in recent years. According to reports, 13% of the testing and packaging sector worldwide is based in the nation.

Global chip manufacturer Intel has committed to investing $7 billion for its new plant in Penang, Malaysia, and the nation received an astounding $12.8 billion in foreign direct investments (FDI) in 2023.

The Malaysian government last year announced the National Semiconductor Strategy, which will help the industry grow by enhancing the current infrastructure of OSAT facilities, luring more foreign direct investment, and opening doors for chip buyers like Apple and Lenovo to establish manufacturing facilities in the nation.

Tata Electronics will be able to further acquire manufacturing-grade technology (MSGT) through the present acquisition, which is only available through well-established semiconductor companies.

Tata Group Fostering Alliances in Semiconductor Space

Tata Electronics has been forming partnerships with important semiconductor companies. To begin operations in Gujarat, the company inked a memorandum of understanding earlier this year with Powerchip Semiconductor Manufacturing Corporation (PSMC) and Himax Technologies, two Taiwanese semiconductor manufacturers, to produce display semiconductors.

The collaboration intends to enhance its chip design and serve both parties' clientele. In addition, the semiconductor behemoth collaborated with Tokyo Electron Limited (TEL) in 2024 to construct infrastructure for semiconductor equipment.

However, the Indian government is also making investments to support the nation's semiconductor sector. S. Krishnan, the secretary of the government of Electronics and IT (MeitY), stated in March that the government intends to launch the second India Semiconductor Mission (ISM) to assist the nation's chip design infrastructure.