The Tata group has named Intel Corp.’s chief commissioned officer and head of chip business Randhir Thakur as a director at its subsidiary Tata Electronics Ltd because it looks to enter chip manufacturing, the bedrock of recent technology.
Thakur may be a semiconductor industry veteran who was entrusted by Intel’s chief executive Pat Gelsinger to go the chipmaker’s standalone foundry business in March. His induction is aimed toward helping Tata Electronics gain the expertise needed to style and manufacture chips, consistent with people conversant in the event.
The move comes amid a worldwide shortage of semiconductor chips on account of conflicts with their leading supplier China. The automotive industry has been a serious casualty of the chips shortage.
For now, it’s not clear if Tata Electronics will manufacture chips or design them, or do both, because the company remains within the process of completing a planned $750 million facility for creating electronic components in Hosur, Tamil Nadu.
Neither is it clear if Thakur’s appointment on the board of Tata Electronics signals a deeper partnership with the most important chipmaker by sales, under which the homegrown company could supply key parts for Intel’s foundry business.
Tata Electronics is predicted to appoint a chief military officer within the coming two months.
Calls and a text message to Thakur seeking comment went unanswered. A spokesperson at Intel didn’t answer an email seeking comment. A spokeswoman for Tata Sons declined to comment.
Nipun Aggarwal, a senior vice-president at Tata Sons who oversees strategy and M&A for the steel, infrastructure, and defence business; Banmali Agrawala, president, infrastructure and defence and aerospace at Tata Sons; and Ajoy Mukherjee, a former human resources head at Tata Consultancy Services Ltd, are the three other directors at Tata Electronics.
“The group has entered the electronics and semiconductor business. We are taking baby steps,” said an executive at the Tata group on the condition of anonymity.
Earlier in the week, Tata Sons Ltd chairman N. Chandrasekaran said the group was working to tap into the business offered by high-tech manufacturing of electronics and also possibly semiconductors.
“India can significantly enjoy the geopolitical shifts that we are seeing. At the group, we’ve already found out a business to seize the promise of high-tech manufacturing of electronics, precision manufacturing, assembly, and testing, and semiconductors within the medium term,” Chandrasekaran said at an occasion organized by the IMC Chamber of Commerce and Industry.
The geopolitical shift the Tata Sons’ chairman was pertaining to is America’s technological conflict with China, especially as Asia is home to 80% of the chip-making capacity.
US chipmakers like Intel have outlined an ambitious budget to prop up their production as companies across industries—from telecoms to car manufacturers—stare at chip shortages.
Intel has outlined a $20 billion spending over the approaching years to create two new chip facilities or fabrications plants within the US and to partner with other chip manufacturers, including Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., to provide it with key components.
Intel believes its design capability, alongside the manufacturing prowess of third-party chip manufacturers, should help it churn out chips swiftly.
This opportunity is what Tata Electronics is eyeing—although for now, it’s very early in its efforts to actually become a third-party chip manufacturer.
For now, Tata Projects is building Tata Electronics’ facility, and therefore the factory is predicted to be complete within the coming 12 months, consistent with a second executive conversant in the event.
The Tata group’s equity commitment to the project is about $250 million, while the remaining $500 million has been raised through debt.
“The repayment of term debt shall start from September 2024 while the project is scheduled to be commissioned in FY22, thereby limiting any liquidity risk for the project,” said an India Ratings and Research report, dated 23 march 2021. “The loan facility will have a door-to-door tenure of seven years with an efficient average tenure of about five years.”
Oddly, Tata’s latest venture into electronic and semiconductor manufacturing through Tata Electronics started as TRIL Bengaluru land Four Pvt., which was incorporated in April last year. Five months later, in September, it changed its name to Tata Electronics.