Tata Electronics Plans to Expand Its Semiconductor Footprints in Malaysia

Tata Electronics is planning to expand its semiconductor footprint by exploring the acquisition of a chip fabrication or packaging plant in Malaysia. The Indian conglomerate is in talks with global semiconductor players such as X-Fab, DNeX (which owns the SilTerra facility), and Globetronics, aiming to gain essential expertise and talent in semiconductor manufacturing.

This strategic move is expected to support Tata’s long-term ambitions in India, where it is investing over ₹91,000 crore to build a chip manufacturing unit in Dholera, Gujarat, while it is making investment of ₹27,000 crore in an outsourced semiconductor assembly and test (OSAT) facility in Morigaon, Assam.

The acquisition process is being led by KC Ang, the newly appointed president of Tata Semiconductor Manufacturing. Sources familiar with the matter indicate that Globetronics and DNeX’s SilTerra are the top contenders for acquisition. Malaysia was chosen for its cost advantages, established semiconductor ecosystem, skilled workforce, and government incentives. Industry experts say this would allow Tata Electronics to quickly learn how to run a fabrication or advanced packaging plant, while also training Indian talent for its upcoming facilities at home.

Malaysia is a global hub for assembly, testing, marking, and packaging (ATMP) of semiconductors, holding around 13% of the global market in this space. Its strong supply chain, experienced workforce, and government support make it attractive for companies seeking to scale operations and access advanced manufacturing grade technologies (MGT). Analysts believe that if Tata sets up a base or partners with players in Malaysia, it would significantly strengthen its ability to manage semiconductor operations in India and reduce risks related to global tariffs or supply disruptions.

The Malaysian government’s recently announced National Semiconductor Strategy, which offers a robust incentive package for investors, adds further appeal to the market. Tata’s acquisition of an operational facility could also allow it to license crucial intellectual property (IP) and manufacturing technologies, which are otherwise difficult to obtain.

Fab Economics CEO Danish Faruqui noted that Malaysian companies like Globetronics have faced financial struggles in recent times, especially in 2024. This makes them potential acquisition targets for Indian firms eager to enter the sector. DNeX’s SilTerra facility in Kulim is also seen as a cost-effective option, offering valuable fabrication technologies. DNeX acquired a 60% stake in SilTerra in 2021, with the remaining 40% held by China-based CGP Fund.

X-Fab, another company on Tata’s radar, is a German specialty foundry with six fabs, including one in Malaysia’s Sarawak region. The Malaysian X-Fab facility specializes in CMOS technology, used in processors and memory chips.

With India pushing to become self-reliant in electronics and semiconductors, Tata’s strategy to learn and adapt from established players abroad could help accelerate its goals and build a strong foundation for the country’s growing chip manufacturing ambitions.

Source: MSN