India
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 Ratings.
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.
The Tata 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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