Tata Electronics Plans Malaysia Entry Through Chip Fab Buyout

Tata Electronics is reportedly in talks with global semiconductor players X-Fab, DNeX and Globetronics to acquire fabrication or outsourced semiconductor assembly and test (OSAT) facility in Malaysia.

An ET report said that Tata Semiconductor Manufacturing’s recently appointed president and head KC Ang will be leading the deal.

For the uninitiated, Tata Semiconductor Manufacturing is the semiconductor foundry business of Tata Electronics.

“Globetronics and DNeX’s SilTerra facility are among the front runners to be acquired by Tata Electronics,” one of the sources told ET. 

Tata Electronics declined to comment on Inc42’s queries. 

The acquisition is aimed at boosting Tata group company’s knowledge and talent base ahead of its foray into the semiconductor assembly and packaging business in India, the report added.

The Tata group is investing heavily in the Indian semiconductor industry. It is building India’s first semiconductor fab in Gujarat’s Dholera, with a $11 Bn investment. Additionally, it is investing $3 Bn in a facility in Assam for the assembly and testing of semiconductor chips. This project in Assam will focus on OSAT activities.

Malaysia, An Emerging Semiconductor Powerhouse

In recent times, Malaysia is coming up as a prime location to become one of the world’s strong pillars in the global supply chain of semiconductor chips. Reportedly, the country accounts for 13% of the global testing and packaging industry.  

The country attracted a whooping $12.8 Bn in foreign direct investments(FDI) in 2023 and global chip maker Intel has committed to invest $7 Bn for its new plant in Penang, Malaysia. 

To further attract global players to invest in the country, the Malaysian government announced the National Semiconductor Strategy last year which will support the growth of the industry in further building the current infrastructure of the OSAT facilities, attract more FDI and also create opportunities for chip buyers such as Apple and Lenovo to set their manufacturing facilities in the country. 

The current acquisition will allow Tata Electronics to further acquire manufacturing grade technology (MSGT), which can only be accessed via established semiconductor players. 

X-Fab is an Erfurt-based semiconductor manufacturer which was founded in 1992 and has manufacturing units across Germany, France, Malaysia and the US. While DNeX and Globetronics, founded in 1972 and 1991 are also one of the well established players in the chip making and foundry services space. 

Tata Electronics Leading The Chip Revolution

Tata Electronics has been making alliances with key players in the semiconductor space. Earlier this year, the company signed a memorandum of understanding with Taiwanese semiconductor manufacturers Himax Technologies and Powerchip Semiconductor Manufacturing Corporation (PSMC) to develop display semiconductors to kick start its operations in Gujarat.

The partnership aims to improve its chip design and cater to mutual customers. 

Besides, in 2024, the semiconductor giant also partnered with Tokyo Electron Limited (TEL) to build semiconductor equipment infrastructure. 

While the Indian government is also investing to uplift the semiconductor industry in the country. In March, the ministry of electronics and IT (MeitY) Secretary S Krishnan said that the ministry is planning to roll out the second of the India Semiconductor Mission (ISM) to support the country’s chip design infrastructure. 

As part of the first phase of ISM, INR 65,000 Cr was earmarked for chip manufacturing and packaging units while the remaining INR 10,000 Cr and INR 1,000 Cr were set aside for modernising the semiconductor lab at Mohali and the design-linked incentive scheme respectively.