While the ongoing semiconductor crisis has crippled the automotive industry, the Tata Group is looking to set up its own semiconductor assembly unit in India.

The Tata Group is reportedly in talks with three states to invest up to $300 million (Rs 2,220 crore) to set up a semiconductor assembly and test unit, reported Reuters, as per two sources familiar with the matter.

The Tata Group is said to be in talks with three southern states – Tamil Nadu, Karnataka and Telangana – and is scouting for land to set up the outsourced semiconductor assembly and test (OSAT) plant. An OSAT plant sources silicon wafers from semiconductor foundries, packages, assembles and tests them, finally turning them into finished semiconductor chips.

The company has already looked at some potential locations for the factory and the venue will likely be finalised by next month, said one of the sources, but have declined to be identified as the matter is not public yet.

The Tata Group had previously expressed its interest in entering the semiconductor business, but this is the first time that news about the group’s foray into this sector and its scale has been reported.

"While they [Tata] are very strong on the software side of things... hardware is something they want to add to their portfolio, which is very critical for long-term growth," said one of the sources.

The Tata Group has plans of investing in high-tech electronics and digital business and its push into the semiconductor industry will forward the ‘Make in India’ initiative for electronics manufacturing. Potential clients of Tata's OSAT business include companies such as Intel, AMD and STMicroelectronics.

The factory is expected to be operational by late next year and could employ up to 4,000 workers, said one of the sources, also highlighting that availability of skilled labour at the right cost will be key for the long-term viability of the project.

"Once Tata starts, the ecosystem will come around... So it's very critical to find the right place from a labour standpoint," the source said.

Source: Reuters