Can Kaynes Semicon Supercharge India’s Chip Manufacturing Ambitions?

SUMMARY

Kaynes Semicon aims to provide its cutting-edge chips across industries such as automotive, including EVs, consumer electronics, telecom, and phones.

Kaynes Semicon wants to cash in on semiconductor boom and has already signed LoIs with four clients and has another six in the pipeline.

At its upcoming plant, the company has set a target to produce 100 Mn semiconductor packages in the next one to two years.

India’s semiconductor landscape is going through a paradigm shift — from decades-old engineering and design play to now manufacturing chips, thanks to the centre’s intent to establish the country as a global semiconductor hub and rising demand for semiconductors across industries like electronics, automotive, telecommunications, and defence.

In the last few months, the Indian government has paved the way for several initiatives vital for companies to set up semiconductor fabrication plants (fabs) and Outsourced Semiconductor Assembly and Testing (OSAT) factories domestically. 

A prime example is Micron. The global semiconductor giant received the government’s approval last year to set up a semiconductor unit in Sanand, Gujarat. The plant will likely start rolling out India-made chips in 2025. Tata Electronics also received the Centre’s approval to set up two additional fabrication plants in Gujarat. 

In addition, Murugappa Group’s CG Power has joined hands with Renesas Electronics America Inc. and Stars Microelectronics (Thailand) Public Co. Ltd. to establish an outsourced semiconductor assembly and testing (OSAT) facility in Gujarat.

For the unfamiliar, Kaynes Technologies is a four-decade-old listed integrated electronics manufacturer. It is now setting up a 47-acre OSAT facility under Kaynes Semicon. The fabrication unit will have the capacity to produce 60 Lakh chips per day.

Kaynes Semicon aims to provide its cutting-edge chips across industries and applications such as automotive, including EVs, consumer electronics, telecom, and mobile phones. 

Supported by an established electronics design and manufacturing (ESDM) business and government initiatives, Kaynes Semicon aims to capture a significant share of the Indian semiconductor market, which is projected to grow from $33 Bn in 2023 to $150 Bn by 2030

Kaynes Semicon’s OSAT Mission

Semiconductor is already quite a capital-intensive line of work. Further, what makes this even more capex-heavy is setting up chip manufacturing plants or foundries. Therefore, it is a game played only by large enterprises with the government’s investment support.

For context, the co-founder and CEO of Fabless semiconductor startup Mindgrove Technologies, Shashwath T R, once told Inc42 that setting up a single OSAT plant can cost more than $500 Mn. As ballpark as the number could be, Kaynes has set aside a budget of over $600 Mn for its proposed OSAT facility in Sanand, Gujarat.

OSATs are third-party vendors that provide assembly, packaging, and specialised testing of Integrated Circuits (ICs) to semiconductor manufacturers. 

Besides the global fabless semiconductor players, the company is also working with Indian player FermionIC. It has also signed an MOU with Singapore-based Light Speed Photonics.

Kaynes also has collaborations with a few state-backed accelerator programs and universities, including IIT Hyderabad and Semiconductor Fabless Accelerator Lab (SFAL), so that startups emerging from these institutions can get easier access to its OSAT facility. 

As far as the company’s operations are concerned, Kaynes Semicon has divided its OSAT operations into three distinct parts – legacy packages, advanced packages, and silicon photonics. 

While about 70% of its OSAT has been designated to work on advanced packaging, which includes silicon photonics, about 35-40% is dedicated to traditional or legacy packaging.