Indian industrial giant joins battle to end world’s chip famine

India’s Tata group is reportedly negotiating an opportunity with three of the country’s states to build a semiconductor assembly-and-test unit. The move comes amid the ongoing chip shortage that has severely hit global producers.

The industrial group, one of the country’s oldest, is in search of land for an outsourced semiconductor assembly and test (OSAT) plant, and is currently in talks with the southern states of Tamil Nadu, Karnataka and Telangana, according to unnamed sources, as quoted by Reuters.

With potential investments of up to $300 million, the factory is expected to package, assemble and test foundry-made silicon wafers, and turn them into finished semiconductor chips.

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“While [Tata] are very strong on the software side of things … hardware is something they want to add to their portfolio, which is very critical for long-term growth,” the source told the agency, adding that a location was likely to be finalised by December.

The plant will be launched next year and is expected to employ up to 4,000 workers.

“Once Tata starts, the ecosystem will come around … So it’s very critical to find the right place from a labour standpoint,” the source said, adding that availability of skilled labour at the right cost was key to the long-term viability of the enterprise.

Earlier this year, Tata’s Chairman Natarajan Chandrasekaran had said that the company planned to invest in high-end electronics and digital businesses. The giant is already building a high-tech electronics manufacturing facility in Tamil Nadu.

Tata controls India’s top software services exporter, Tata Consultancy Services, and has interests in everything from autos to aviation, with potential clients of its OSAT business to include such companies as Intel, Advanced Micro Devices (AMD) and STMicroelectronics.

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