The Tata Group, one of India's largest conglomerates, has announced plans to begin producing semiconductors within the country in the coming years.
In an interview with Nikkei Asia, Tata Sons Chairman Natarajan Chandrasekaran revealed that the group is planning to launch new businesses in emerging fields such as electric vehicles.
"We have created Tata Electronics, under which we are going to set up a semiconductor assembly testing business," Chandrasekaran was quoted in the Nikkei Asia report as saying.
He also mentioned the possibility of partnering with existing chip manufacturers, and eventually launching an upstream chip fabrication platform.
The upstream process of wafer fabrication is more challenging both technologically and financially than the downstream steps of assembly and testing.
Tata's move into chipmaking will come at a time as demand for semiconductor-intensive products, such as smartphones and electric vehicles, is growing rapidly in India.
India's semiconductor market is expected to more than double between 2021 and 2026 to $64 billion, according to the India Electronics and Semiconductor Association.
The global chip shortage and increasing tensions between the US and China are leading major chipmakers to seek more diversified supply chain locations. This has created momentum to diversify chip supply chains, which are currently concentrated in East and Southeast Asia.
Both Tata and the Indian government are looking to take advantage of this shift to establish India as a new hub for semiconductor technology. The ongoing "decoupling" of US-China relations in chip-related technology is driving this move towards diversification.