Larsen & Toubro (L&T), which is marking its foray into semiconductor design with an investment of up to ₹830 crore, wants to start the fab by the end of this quarter “if all goes well”. Further, the company expects its orderbook to rise to ₹5 trillion by the end of this year or the first quarter of next year, much ahead of its own earlier estimates, a top official said.
The engineering and infrastructure conglomerate, along with its subsidiary L&T Technology Services (LTTS), will assemble a team to work on the chip design. The firm, which will not venture into chip manufacturing, intends to set up chip design labs in India – like in Bengaluru or Chennai – and some design studios in the US.
“We understand the industrial engineering space well, and LTTS does some level of chip designing for automobile companies and others. As of now, we want to focus on the knowledge part of the chip, which is the designing and that’s where the intellectual property rights exist,” L&T Whole Time Director & CFO R Shankar Raman told FE in an interview.
“Given our industrial background and engineering capabilities, we will operate closer to the mature nodes (a sophisticated chip), which are used more for industrial and automotive applications,” he added.
This does not require any factory setup, but needs labs which would be set up in India as the country has a “lot of talent”. The investment of ₹830 crore would be over three years.
The initial stages, L&T would rope in a partner – such as a car manufacturer or an industrial equipment company – to understand their requirements and design chips to meet them. “We have to co-create this requirement with the customer,” he added.
Separately, the firm is expecting its orderbook to rise to ₹5 trillion faster than earlier estimates.
“Bulky orders help us leapfrog…. If all goes well, it might happen by the end of this year or the first quarter of next year,” he said, adding these are “indicative” goalposts.
“I see about ₹5 trillion prospects in the infrastructure sector, of which about ₹1 trillion would be in the area of buildings, mostly from India,” he said, adding dedicated freight corridors, capacity additions by paint, cement factories and steel and automobile firms are emerging opportunities.
Transportation (expressways, ring road projects, freight corridors, metro projects), power transmission, water (rural, urban and sewage treatment) and hydrocarbon initiatives among others are other opportunities.
As of September 30, the company’s order book rose 22% on a year-on-year basis to ₹4.51 trillion, recording the highest-ever for the company. Earlier in May, Raman had indicated L&T’s orderbook position to rise to ₹5 trillion in the next two years, if the “momentum continues”.
Talking about the Hyderabad metro, Raman said that it was posting improvement every quarter.
“The ridership has improved, completed part land monetisation and got ₹900 crore from the government, all these were used to repay debt”.
On private and government capex, Raman said the “flow is on”. Of the ₹10 trillion committed by the government, nearly 38% have been invested as of August, while private capex is also flowing in bits and parts, he said, adding capital was not a constraint.