Tata Group in talks with Taiwanese companies for chip-making project: Report

A shortage of chips is holding back India's auto sector just when it sees early signs of a recovery in demand

India's largest conglomerate, the Tata Group, is reportedly in discussions with major international firms, including from Taiwan, for its $300-million chip-making unit project.

According to a report by Business Standard, the Tatas have opened a separate channel for a possible tie-up with Taiwanese manufacturers, namely Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC), for chip manufacturing in India.

Governments across the world are subsidising the construction of semiconductor plants as chip shortages hobble the auto and electronics industries and highlight the world's dependence on Taiwan for supplies.

Also read: Chip shortage situation has eased by 25%: IESA

So far, Tamil Nadu, Karnataka and Telangana have been identified as possible locations for the plant and the Tatas aim to finalise the location this month itself and have it up and running by late 2022. The facility will assemble and test semiconductor chips after sourcing the sophisticated silicon wafers from semiconductor foundries like Taiwan-based TSMC, Fitch Solutions had said, quoting media reports.

India has previously tried to woo semiconductor players but firms were deterred by India's wobbly infrastructure, unstable power supply, bureaucracy and poor planning.

Also read: India plans Rs 76,000 cr scheme to lure semi-conductor firms

Earlier this week, reports had also warned that "reliance on silicon wafers made by offshore foundries, growing geopolitical tensions in the region and the emergence of new Covid-19 variants all pose considerable downside risks to Tata's plans.

In March 2021, India had proposed to offer more than $1 billion in cash to each semiconductor company that sets up manufacturing units in the country as it seeks to build on its smartphone assembly industry and strengthen its electronics supply chain, according to Reuters.

(With agency inputs)