Amid all the rumors of planned IPOs by Tata Play and Tata Technologies, the salt-to-steel conglomerate Tata Group, the 29 public companies with a combined market capitalization of US$314 billion (Rs.23.4 trillion) as of December 31st hat , 2021, may be quietly preparing for a very different IPO. India’s electronics industry is poised to grow to $300 billion by 2025, a share of which will be eyed by the Tata Group with Tata Electronics Pvt Ltd (TEPL). Founded in 2020, this greenfield venture has expertise in manufacturing precision electronic components and has a manufacturing facility in Krishnagiri district of Tamil Nadu.
The latest development to put Tata Electronics in the spotlight is Natarajan Chandrasekaran, chairman of Tata Sons, who confirms the company’s plans to enter the semiconductor business, which is projected to reach $1 trillion in global sales by 2030. Under Tata Electronics, the group initially wants to set up an Outsourced Semiconductor Assembly and Test (OSAT). Also known as Assembly, Testing, Marking and Packaging (ATMP), this plays a crucial role in semiconductor manufacturing as no chip can be used in a product without going through the packaging and testing process. For this reason, the group also hired Raja Manickam as CEO of Tata Electronics OSAT India.
However, the Tata Group may not consider a mature technology for OSAT, which is easy to develop and accounts for around 75-80% of sales in the industry. Instead, the company is evaluating advanced packaging, which is engineering-led and includes wafer fab-like processing. The latter is becoming increasingly important as leading companies like TSMC and Intel have advanced nodes. However, since India does not yet have fabs, Tata Electronics and even the other upcoming OSATs will have to source processed wafers from outside.
Semiconductor analyst Arum Mamphazy told Business Today, “It’s not a matter of when Tatas gets into semiconductors. They will get into semiconductors when there are big names to associate with or when they have a very solid plan. In fact, they could decide around the middle of next year whether to apply for a silicon factory or a compound factory. Since Tatas is interested in the automotive industry, something like a gallium nitride and silicon carbide factory could also be of interest.”
In February 2021, Tata Electronics signed a Memorandum of Understanding (MoU) with the Government of Tamil Nadu to set up a mobile component manufacturing facility. The company was to invest Rs 4,684 crore in the new Krishnagiri plant. At the time, N Chandrasekaran had said that this was a very large project in precision engineering and manufacturing and would create capacity for the country. And now Tata Group is also in talks with Wistron to set up an electronics manufacturing joint venture to assemble iPhones in India.
Commenting on the developments, Piyush Nagda, Director – Private Wealth, Monarch Networth Capital Ltd. told Business Today: “Tata Electronics is a new Tata Group company aimed at manufacturing precision components such as semiconductors, EVs and EV batteries. It’s a niche segment with a huge market size, but it will take a multi-year cycle for Tata Electronics to build manufacturing facilities and ramp up the business. It’s a long road for them to go public.”
Whilst it can take 5-7 years for Tata Electronics Private Limited to be ready to go public, there is no order or sequence when it comes to business decisions. And since Tata Electronics will have ties to big names, this is an unlisted Tata Group company that you might want to keep an eye out for.
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