The Tata Groups'
plans to set up a USD 300-million semiconductor manufacturing unit on a wartime
basis may face headwinds, for the absence of raw materials and its scarce
availability outside. The pandemic and its after effects on increased demand
for data and consumer electronics have left semiconductor makers unable to keep
up with supplies. Adding to the pains are the extreme weather and natural
disasters in many producing countries, which have all put further pressure on
supply chains, according to a note by Fitch Solutions, an affiliate of Fitch
The Tata Group
is reportedly in discussions with several states to identify the land to build
a USD 300 million chip making unit. According to reports, the country's largest
conglomerate is planning to run the group as an outsourced semiconductor
assembly and testing facility.
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 said quoting media reports.
plant will rely on wafer production from offshore chip foundries, which are
already struggling under intense demand. Tatas will, therefore, be vulnerable
to further disruptions to silicon wafer manufacturing, the report said.
The report also
said new Covid-19 variants will continue to accentuate the semiconductor
shortage as the emergence of the Delta variant already saw Asia once again
become the epicentre of the pandemic in the first half, particularly as the
region is characterised by relatively low levels of vaccination. A further
downside risk is Tata's inexperience in making semiconductors.
Source: ET Auto.com
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