Engineering giant Larsen & Toubro (L&T) is exploring an entry into electronics manufacturing services (EMS) and has held preliminary discussions with the Tamil Nadu government for about 200 acres of land near Chennai, people aware of the matter told ET.
The $17 billion group, which already has allied entities in the electronics space, aims to become an integrated player with end-to-end manufacturing capabilities, taking a leaf out of the Tata playbook. Tata Electronics has taken the contract manufacturing route to be an Apple supplier. At this stage, it is unclear if L&T is looking to follow suit or chart its own course.
Given its wide experience in mega engineering, procurement and construction projects and presence in strategic electronics through defence and aerospace units, L&T is likely to focus on components for these segments, said the people cited.
It wouldn’t be surprising if L&T aimed to use the land not just for EMS but also for its semiconductor ambitions, one of them added.
“These are initial plans and will eventually take a bigger shape in the future,” an executive said.
L&T and the Tamil Nadu government didn’t respond to queries.
“At the time of the discussions, semiconductor manufacturing was not on the cards,” said one of those cited.
The semiconductor arm of the organisation, which has tied up with a Foxconn entity, is only one component of L&T’s wider ambition.
An analyst backed this view, adding that L&T is not keen on getting into the smartphone space like the Tatas.
“Their focus would be on segments where they can marry it with existing adjacencies, for instance, aerospace,” he said. “The company already has subsidiaries like L&T Precision Engineering & Systems which do some work in electronics and so expanding on that in the EMS space would be a natural move.”
He added that industrial EMS is another opportunity that L&T may pursue.
“Industrial EMS offers scale and is not very competitive with Flextronics and Kaynes being among the larger players with exposure to this segment,” the person said. “They could look at building IoT modules for the automotive industry or even energy meters. L&T has the connections in enterprises and has big infrastructure projects as well that would make it a good fit for this segment.”
In August, L&T chairman SN Subrahmanyan told ET the group’s two-year-old chip design business has 400 engineers, mostly based in Bengaluru, with the rest in Austin, Munich and Tokyo. The business focuses on analogue chips, mostly in larger nodes like 28 and 48 nanometres.
“The idea is to design the chip, develop a proof of concept, and showcase it to clients,” he had said. “If successful, we’ll contract manufacture the chips. We may well become the first Indian company to design and commercialise chips fully in-house. We already have seven clients on board.”
Fabless firm L&T Semiconductor Technologies (LTSCT) said October 14 it had entered a long-term partnership with Foxconn subsidiary Hon Young Semiconductor (HYS) to jointly develop and provide high-voltage semiconductor wafers ranging from 650V to 3300V.
HYS provides wafer foundry services for both silicon carbide (SiC) and silicon (Si) platforms. The companies had said they would utilise HYS’ facilities in Taiwan to engineer and produce wafers explicitly tailored for automotive and industrial applications.
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