L&T eyes entry into electronic manufacturing services: Report

Engineering major Larsen & Toubro (L&T) is reportedly taking initial steps to enter the electronics manufacturing services (EMS) sector, having held preliminary discussions with the Tamil Nadu government regarding the acquisition of approximately 200 acres of land near Chennai.

According to a report in The Economic Times, the $17 billion conglomerate, already established in allied electronics fields, seeks to become a fully integrated player with end-to-end manufacturing capabilities. While it is yet to be determined if L&T will follow a similar route to Tata Electronics, sources indicated to the financial daily that the company will likely leverage its experience in engineering, procurement, and construction, as well as its existing presence in strategic electronics for defence and aerospace.

According to people familiar with the matter, L&T’s focus will be on components for sectors in which it already has significant capabilities. The possibility of using the newly acquired land for both EMS and semiconductor-related activities has not been ruled out, although semiconductor manufacturing was reportedly not part of the discussions at this stage, the report stated.

The company’s broader ambitions appear to centre on sectors where it can build on its existing strengths. L&T already operates subsidiaries such as L&T Precision Engineering & Systems, which perform work in electronics manufacturing, making expansion into EMS a logical step.

Industry experts believe that L&T may look to industrial EMS as a significant opportunity, given its potential for scale and relatively limited competition.

In addition to EMS, L&T’s semiconductor ambitions continue through its chip design business, which, according to chairman SN Subrahmanyan, employs around 400 engineers, primarily in Bengaluru with others stationed in Austin, Munich, and Tokyo. Subrahmanyan explained that the idea is to design the chip, develop a proof of concept, and showcase it to clients, and if successful, to contract manufacture the chips.