L&T may enter electronics manufacturing, holds talks with Tamil Nadu govt: Report

Engineering major Larsen & Toubro (L&T) is considering a shift into electronics manufacturing services (EMS) and has held initial discussions with the Tamil Nadu government for a possible land acquisition near Chennai, according to a report by The Economic Times (ET). The company is stated to be exploring around 200 acres for the project, people familiar with the matter notified the publication.

As per ET, the Rs 1.7 trillion conglomerate – which already operates in various electronics-related segments – is seeing to develop integrated finish-to-finish manufacturing capabilities. The initiative mirrors strategies seen in other Indian conglomerates such as Tata Group, whose Tata Electronics arm has taken the contract manufacturing route to become an Apple supplier. However, sources quoted by ET indicated that L&T has yet to decide whether to follow a similar model or carve out its own approach.

People cited by ET stated L&T’s vast experience in engineering, procurement, construction, and strategic electronics, especially through its defence and aerospace divisions, positions it well to focus on component manufacturing for these sectors.

According to the report, industest watchers believe the shift could also align with L&T’s semiconductor ambitions. “These are early-stage plans that could evolve into something larger over time,” one official was quoted as declareing. However, ET noted that during the preliminary talks, semiconductor fabrication was not part of the immediate discussions.

The newspaper added that L&T’s semiconductor arm, which has a partnership with a Foxconn entity, forms just one part of its broader technology ambitions. Analysts notified ET that the company is unlikely to enter the smartphone manufacturing segment, choosing instead to focus on areas adjacent to its existing capabilities – such as aerospace and industrial electronics.

An industest expert quoted by ET suggested that industrial EMS offers a strong opportunity for L&T, given that the space remains relatively less crowded, with Flextronics and Kaynes Technology among the few major players. The company could potentially manufacture IoT modules for the automotive or energy sectors, leveraging its existing enterprise connections and infrastructure projects, the report stated.

ET also recalled that in August, L&T chairman SN Subrahmanyan highlighted the company’s growing focus on chip design. The group’s two-year-old semiconductor design division employs about 400 engineers, primarily in Bengaluru, with additional teams in Austin, Munich, and Tokyo. The unit specialises in analogue chip design, focutilizing on larger nodes such as 28 and 48 nanometres.

At that time, Subrahmanyan notified ET that L&T’s goal is to design and develop proof-of-concept chips, then contract their manufacturing externally. He added that the company may eventually become India’s first to fully design and commercialise chips in-houtilize, noting that it already has seven clients on board.

Source link