Tata Electronics in talks with NXP, Tesla on chip production collaboration

Tata Electronics is engaged in advanced discussions with Dutch semiconductor company NXP Semiconductors to bring them on board as a customer for its upcoming semiconductor fabrication plant in Gujarat and its OSAT (Outsourced Semiconductor Assembly and Test) facility in Assam, several sources familiar with the discussions told The Economic Times. It was also mentioned that Tata is considering Tesla as a potential customer for their semiconductor business.

According to sources, the company being NXP may pursue a partnership similar to Tata's engagement with US-based Analog Devices Inc (ADI) where the two companies are pursuing chip manufacturing initiatives in India. NXP operates its own fabrication facilities globally, but it outsources components of its chip manufacturing – something Tata's upcoming domestic semiconductor capability looks to fill.

A source familiar with the situation stated that NXP considering which of its products could be produced at the Gujarat fab. They are looking mainly at the analog and industrial chips, which use mature node technologies. Analog and industrial chips typically do not use advanced fabrication. The products are also in line with what Tata plans to produce.

This is seen as part of a larger industry trend to diversify the supply chain away from heavy reliance on dominant players like Taiwan's TSMC. There seems to be a certain amount of openness to bringing on board new manufacturing partners like Tata Electronics for mature node semiconductors, particularly as the benefits of geographical diversification will be advantageous.

The Tata fab will be in Dholera, which is expected to be operational later this year. The fab will have a capacity of 50,000 wafer starts per month, and will manufacture high performance compute chips with its primary processes on 28nm technology. In addition to power management chips, they will also develop products for markets like electric vehicles, telecom, defence, consumer electronics and power systems.