IPO-Bound Ola Electric In Discussions With Kaynes Tech’s Arm To Make Chips For Its EVs

Electric vehicle maker Ola Electric is reportedly in discussions with Mysuru-based Kaynes Technology’s semiconductor arm Kaynes Semicon to manufacture chips for its EVs based on its own design.

If the deal materialises, Kaynes would be manufacturing the chips by assembling and processing the imported wafers.

It is pertinent to note here that currently Ola Electric procures its chips from US chip designer Qualcomm. The CEO of the semiconductor manufacturer, Raghu Panicker, told Business Standard that the company is in talks with Ola Electric’s CEO and cofounder Bhavish Aggarwal, along with other auto original equipment manufacturers (OEMs) for semiconductor manufacturing. 

Inc42 has reached out to both Panicker and Ola Electric for comments on the development. The story will be updated based on the responses. 

This comes at a time when Aggarwal is pressing to curtail dependencies on foreign entities for his businesses. Recently, he lashed out at Microsoft-owned LinkedIn after it removed his post on “pronoun illness” and announced that Ola would stop using Microsoft’s Azure and shift to Krutrim AI for cloud services.

Earlier this year, he also announced that Ola Electric is moving away from using Google Maps to the group’s in-house Ola Maps. The company commercially launched the maps with the mass roll out of the Move OS 4 software platform for its electric two wheelers in January. 

Besides, the company is also awaiting the markets regulator Securities and Exchange Board of India’s (SEBI) approval for an INR 7,250 Cr initial public offering (IPO). The IPO will comprise a fresh issue of INR 5,500 Cr and an offer-for-sale (OFS) component of INR 1,750 Cr.

Meanwhile, Kaynes Semicon is working on establishing an outsourced semiconductor assembly and testing (OSAT) unit in Gujarat’s Sanand for semiconductor chips with an investment of INR 5,000 Cr. For this, it has partnered with four global technology companies, namely, Globetronics of Malaysia, Aptos Tech of Taiwan, Mixx Tech in the US and A0I of Japan. 

The plant is expected to have the capacity to produce 1 Bn chips annually. The company is also planning to set up 13 chip assembly and testing lines in the next two years.

Kaynes Technology reported a Profit after tax (PAT) of INR 81.3 Cr for the quarter ending March 31, 2024 (Q4 FY24). Its revenue from operations stood at INR 637.3 Cr during the quarter under review.

Ola Electric’s bid to partner with Kaynes Semicon comes at a time when the domestic semiconductor space is heating up. 

While the government has allocated INR 76,000 Cr under the Semicon India programme to develop the semiconductor and display manufacturing ecosystem in the country, it also recently approved the country’s first semiconductor fab to be set up by the Tata Group, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC), with a net investment of INR 91,000 Cr.

 As per Inc42 analysis, the size of India’s semiconductor industry is expected to surpass the $150 Bn mark by 2030, growing at a 24% compound annual growth rate (CAGR) between 2023 and 2030.