India’s Tata Group announces plans to enter into semiconductor manufacturing segment amid major global shortage

Tata sons, the primary stakeholders in the Tata group of companies in India recently announced that Tata Electronics would be entering the semiconductor manufacturing segment.

“At the Tata Group, we have already set up a business to seize the promise of high-tech manufacturing of electronics, precision manufacturing, assembly and testing, and semiconductors in the medium term,” chairman N Chandrasekaran said .

The pandemic has brought in a major chip shortage across the world when lockdowns were imposed, these close downs and movement restrictions subsequently affected supply chain, logistics and manufacturing on a very large scale.

Supply shortfalls in semiconductors are expected to continue well into the next couple of years and most of the big shots are heavily dependent on China who is one of the biggest suppliers after Taiwan who holds a market share of 50% in this segment.

But since the Covid-19 pandemic there has been a shift in reliance which Tata hopes to take advantage of by lending a hand to improve the availability and supply not just in India on a local level but also representing India in this segment worldwide.

“On rebalancing supply chains, India can benefit from global shifts. The Tata group has already set up a business to seize the promise of high-tech manufacturing for electronics. A domestic electronics industry could unlock $1 trillion in GDP and create millions of jobs,” he added.

The company plans to use their facility in Hosur, Tamil Nadu to make semiconductors. Another bright side of this initiative is that the company has already began the process of recruiting and hiring nearly 18,000 employees of which 90% are most likely to be women.

Another major reason for this foray is that Tata Motors and its UK based subsidiary Jaguar Land Rover (JLR) announced major losses. They even said that global semiconductor shortages have forced them to limit operations and in certain cases even hold of production all together which has directly impacted their sales.

“Based on the recent inputs from suppliers, we now expect chip supply shortages in the second quarter ending September 30, 2021, to be greater than in the first quarter, potentially resulting in wholesale volumes about 50% lower than planned, although we are continuing to work to mitigate this,” Jaguar Land Rover (JLR) said.

In a way we could say that with the parent incorporation venturing into manufacturing of semiconductors would directly benefit its subsidiaries and sister firms such as Tata Motors and Tata Power, therefore in the near future they do not have to worry about the availability and supply of semiconductors.