Indian firms target overseas assets to fast-track semiconductor ambitions

Time of India

a day ago

Strategic overseas acquisitions by India's nascent semiconductor companies are set to emerge as a key enabler for the country's ambitions in chip manufacturing and assembly, ensuring access to proprietary expertise, precision equipment, and critical intellectual property, experts told ET.Indian firms including Tata Electronics and L&T Semiconductor Technologies (LTSCT) have recently made significant moves to acquire foreign assets even as they invest in greenfield facilities within the country.These acquisitions bring experienced engineering teams and operational know-how, which are essential for upskilling local workforces and establishing robust training pipelines, explained Kunal Chaudhary, partner and co-leader, inbound investment group, at EY India.
LTSCT and Kaynes Semicon are jointly acquiring the power modules business of Fujitsu General Electronics, based in Japan, while opto-semiconductor maker Polymatech last year acquired US-based semiconductor equipment provider Nisene Technology Group to build an integrated chip manufacturing business.
Tata Electronics is exploring takeovers of semiconductor fabrication and outsourced semiconductor assembly and test (OSAT) facilities in Malaysia.
Chaudhary said while India has already built a strong presence in chip design, moving into OSAT — a high-margin segment that includes advanced packaging and assembly — will be key to climbing the value chain.
With advanced packaging technologies becoming critical to semiconductor innovation, India's entry into this space could enhance its global positioning, he said.
After Kaynes and LTSCT announced acquisition of Fujitsu General's power modules business for Rs 118.34 crore on Monday, Kaynes CEO Raghu Panicker said the deal opens up new avenues for advanced semiconductor packaging excellence.
'This move strengthens Kaynes' OSAT capabilities, while aligning with our long-term strategy of supporting global original equipment manufacturers through best-in-class technology and scalable infrastructure,' he told ET.
Kaynes is one of the four companies under the India Semiconductor Mission 1.0 building OSATs in the country, while Larsen & Toubro has invested more than $300 million to create its fabless chip company LTSCT.
ET on June 3 reported that Tata Electronics is in talks with several global semiconductor companies to acquire a fabrication or OSAT plant in Malaysia. The move is aimed at bolstering the Tata Group company's knowledge and talent base ahead of its ambitious foray into semiconductor fab, assembly and packaging in India.
'Most acquisitions and partnerships at the moment are really about two things: gaining access to trained talent – essentially acqui-hires – and jump-starting work on cutting-edge technologies,' said Prithvideep Singh, general manager at Mohali-based Continental Device India Ltd (CDIL) that has a partnership with German semiconductor manufacturer Infineon Technologies.
'Gaining access to know-how is only half the battle,' he said. 'Transferring it to Indian operations and building capability within local teams…demand years of groundwork, deep technical maturity, and process discipline.'
Infineon supplies high performance silicon wafers, and CDIL packages and distributes advanced power semiconductors like MOSFETs and modules specifically tailored for the Indian market, including for electric vehicles and renewables.
'All the JVs and strategic partnerships are a result of the need for Indian entities to build their core competency with best in class proven technology and manufacturing processes,' said Neil Shah, cofounder and vice-president, research, at Counterpoint Research.
He noted that matured nodes foundry and back-end packaging OSAT/ATMP are low hanging opportunities for new entrants.
'Building fabs for advanced nodes is still a distant dream for Indian enterprises as there are just three big players like TSMC, the leader, and Samsung and Intel, which are still struggling versus TSMC,' Shah said. 'So, high value fab will take time if at all one of them decides to set up in India in future, if the other ecosystems develop handsomely,' he explained.
Biswajeet Mahapatra, principal analyst at Forrester, said acquiring assets of foreign entities allows Indian companies to access advanced technologies like wafer-level packaging, 2.5D/3D integration, and chiplet-based designs, which are critical for modern semiconductors.
By leveraging foreign expertise and infrastructure, Indian companies can reduce reliance on imports for high-end packaging solutions and meet the growing demand from global OEMs like Apple and Intel, he explained.
For the broader ecosystem, overseas acquisitions and partnerships can help bridge critical capability gaps. Given the current talent crunch in India, they offer a smart and often necessary path for companies entering the sector, experts said. But the real challenge lies in how effectively that know-how is embedded into Indian operations and scaled with consistency and quality, they added.