After 5G equipment, Tata Group looking to enter semiconductor manufacturing

Tata Group is looking to make a foray into semiconductor manufacturing, Chairman N Chandrasekaran said on Monday.

Pegging the market opportunity of high-tech manufacturing of electronics at $1 trillion, Chandrasekaran said Tata Group has already set up a business to seize the opportunity.

His remarks come days after the $100-billion group announced entry into 5G equipment manufacturing and a string of acquisitions to create the Tata Digital business.

Semiconductor manufacturing, which involves building chipsets among other things, requires high investments and India does not have any such facility yet.

Chandrasekaran explained that alterations to the global supply chains, which are heavily dependent on China, in the aftermath of the pandemic and geopolitical changes, will make businesses shift their reliance on other countries and called this a huge opportunity for India, which becomes the second base.

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“At the Tata Group, we have already pivoted into a number of new businesses like electronics manufacturing, 5G network equipment as well as semiconductors, in all probability.

“On rebalancing supply chains, India can significantly benefit from the geopolitical shifts that we are seeing. At the 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,” he said while speaking at IMC Chamber of Commerce and Industry's AGM.

He, however, did not elaborate on the exact plans on this front for the group.

Chandrasekaran said he sees four trends emerging in the post-pandemic world -- rapid digital acceleration, new approach to supply chains, a re-imagination of growth with environmental sustainability at the core and inclusion of health and wellness concerns by every business.

“The four themes will play into each of our own existing businesses, and they are also leading to brand new initiatives for the Tata Group,” he said.

Tata Digital is building multiple platforms including a consumer offering covering retail, travel, financial services, health and education, which will target both high-frequency buys and also discretionary spends, he said.

Chandrasekaran said when it comes to environmental sustainability, businesses need to have “time-bound goals, not vague and distant targets”, and it is critical to invest in research and development in future growth sectors such as renewable energy which is likely to see 20 new sources of power emerging in the next two decades.

“Given where India is in our development curve, we have an opportunity to address our jobs challenge through a leapfrog to a green economy, through solar installation, microgrids, sustainable cooling, and better waste management. At the Tata Group, we are looking at all of these sectors,” he said.

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Chandrasekaran, who took over the group chairmanship after leading its IT arm TCS, said there is a need to adopt artificial intelligence, cloud and data more aggressively, and Tata Group considers this as a top priority.

Chairman of the group, which devotes nearly all its profits to philanthropic causes, also spoke about the inequities which are being created because of the pandemic and urged for a fast-paced rollout of services to universalize education and healthcare services.

Solving such problems using digital technologies will also create employment opportunities, especially for the low skilled people, and help create a market, Chandrasekaran said, expecting them to deliver 30 million new jobs.

He said with hybrid working possibilities, a good number of the 120 million women educated till the secondary school level can get jobs, and added that this alone can add $440 billion to the GDP.