What will the Tata Group do in the semiconductor biz?

Rumoured for over a year, Tata Sons Chairman Natarajan Chandrasekaran has confirmed on Thursday that the company plans to venture into the semiconductor business. Tata Group, under Tata Electronics Private Limited (TEPL), a greenfield venture with expertise in manufacturing precision components, will set up an Outsourced Semiconductor Assembly and Test (OSAT). OSAT, also referred to as assembly, testing, marking, and packaging (ATMP) units, plays a crucial role in semiconductor manufacturing as they package and test the silicon chips made at the foundries before they are shipped to the market. For the same, Raja Manickam was appointed as the CEO of Tata Electronics OSAT India in 2021. 
Earlier, Tata Group was also in the news for its plans to set up a $300-million semiconductor manufacturing facility. However, the company hasn’t applied for the government’s semiconductor fab scheme until earlier this year.
Semiconductor analyst Arun Mampazhy told Business Today, “The year-old rumour of Tata Group setting up an OSAT has almost been confirmed. Tata’s hired Raja Manickam as its CEO for the OSAT division for the semiconductors testing division. He has been probably exploring it for almost a year, and finally, they are closing on the OSAT part.”
Tata Group isn’t the first company to announce plans to set up OSAT or ATMP in India. Following the government’s India Semiconductor Mission offering financial support of Rs 76,000 crore to make India a semiconductor hub,  over half a dozen companies have shown interest in putting up ATMP units in India. 
In July this year, Rajasthan-based Sahasra Semiconductors announced its plan to set up a memory chip assembly, test, and packaging unit at Bhiwadi, with a total investment of Rs 750 crore. 
Even Tamil Nadu semiconductor manufacturing company Polymatech had announced its plans to invest $1 billion to expand its chipset manufacturing and packaging facility in the state. US-headquartered Micron, too, was rumoured to set up an ATMP unit in India.

Why is OSAT/ATMP important?

ATMP is critical for India’s Semiconductor Mission and overall semiconductor ecosystem. No chip can be used in a product without going through the packaging and testing process. Also, for some very advanced products, packaging provides a way for integrating multiple chips done is different technologies into a simple package using the technologies like SIP, MCM, Chiplets, Interposer, TSV etc. This helps in a significant way to extend Moore’s law as more transistors get integrated into a single product in a cost-efficient way. As India is trying to become a semiconductor nation, this is an opportunity to catch up with the rest of the world by investing in advanced packaging technologies.

Satya Gupta, President of VLSI Society of India and CEO of Epic Foundation, had told Business Today that while only a handful of companies have applied for silicon and display fab, there is much interest in setting up ATMP in India. “ATMP is an excellent way to kick start semiconductor manufacturing in India. It is a relatively low investment compared to wafer fabs, and the time to put up the factory is shorter. Depending on the complexity of the package type, the investments can range from $30-40 million to $300-400 million. Most global experts have suggested that India should first build ATMP units while the larger wafer manufacturing plants come up. Also, unlike the wafers, the output of ATMP units can be directly consumed by the electronics product companies,” he said.
In September this year, covering all aspects of the ecosystem, even the incentive for ATMP was increased to 50 per cent by the government of India.

Also read: Air India, Vistara merger: Singapore Airlines explains how it's a win-win deal

No clarity on fab technology

The salt-to-steel conglomerate intends to invest $90 billion in this space across the group companies over the next five years. It plans to foray into advanced chip manufacturing, popularly known as fabs, in a few years.  While Tata Sons chairman Chandrasekaran has indicated the company’s plans to get into advanced chip manufacturing or fabs, no information is available on the kind of technology or the nodes the company plans to invest in.

With no expertise in semiconductor manufacturing, Tata Electronics will have to partner with a company (read fab manufacturer) that can transfer an existing, in-production technology, which has to be a production-grade license as per the government policy. However, the group's other option is to develop the technology in-house, but this would be a long, tedious, and resource-hungry process. 
Tata Group hasn’t responded to an email sent by Business Today seeking comment on the same at the time of publishing the article.

But Tata group companies have been actively working in this space. For instance, in June this year, Japanese semiconductor manufacturer Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, entered a strategic partnership with two Tata Group companies - Tata Motors Ltd. (TML) and Tejas Networks Ltd. (Tejas). This strategic partnership is focused on developing semiconductor solutions for technologies across automotive, IoT, and 5G Systems. In addition, Renesas and Tata Consultancy Services Limited (TCS) will also partner by establishing a Joint System Solution Development Center in Bangalore to focus on comprehensive system solutions for the IoT, Infrastructure, Industrial and Automotive segments by leveraging Renesas’ semiconductor solutions and TCS’ industry experience.

Whatever the technology or node may be, a reputed and big group like Tata getting into semiconductors is a good sign for the future of the ecosystem in India.

Also watch: Tata-Bisleri Deal: Everything About Iconic Bottled Water Brand