Elon Musk-led Tesla has started talks with American memory chip manufacturer Micron and Mumbai's CG Semi , a Murugappa Group subsidiary, to explore supply alternatives whilst expanding its global supply network, according to informed sources. This development follows Tesla's earlier strategic partnership with Tata Electronics for semiconductor procurement for worldwide operations.
Elon Musk announced on X on Saturday about his anticipated visit to India this year.
"Tesla spoke to representatives from the three large semiconductor facilities that have taken off in India — Micron, CG Semi and Tata Electronics," a source told ET. It "called meetings about a month-and-a-half ago… to get a sense of what kind of chips are expected to be packaged, when they'll be ramping up and the timelines for operations."
The Gujarat-based Micron facility aims to provide assembly and testing capabilities, serving both domestic and international markets. CG Semi's unit will focus on OSAT operations. This collaboration between CG Power, Renesas and Stars Microelectronics will primarily serve Renesas whilst catering to global clients.
Various Tata enterprises including AutoComp, Consultancy Services, Technologies and Electronics have established themselves as Tesla's global suppliers, preparing for expanded roles should the EV maker enter India.
Tata Electronics has committed investments of Rs 91,000 crore for a semiconductor manufacturing unit in Dholera, Gujarat, alongside a Rs 27,000 crore OSAT facility planned in Morigaon, Assam.
Murugappa's CG Semi is establishing an OSAT facility in Sanand with an investment of Rs 7,600 crore, alongside Micron's assembly, testing, marking, and packaging (ATMP) facility, valued at over Rs 23,000 crore ($2.7 billion).
Industry experts note that international companies are increasingly considering India for semiconductor operations as they diversify their supply chains. Independent automotive analyst Ashwin Amberkar says, "There are strong indications that Tesla has started engaging suppliers beyond China and Taiwan, with targets set as early as 2025. India is emerging as a serious contender in this shift."
Tesla's Shanghai Gigafactory currently depends on Chinese fabrication facilities for mature-node chips. However, Amberkar notes that escalating geopolitical tensions and cost increases are compelling Tesla to "rethink its sourcing strategy."
Amberkar explains that CG Semi is developing a comprehensive OSAT facility in Gujarat, whilst Micron's Sanand unit will specialise in automotive-grade dynamic random-access memory for computer processors.
According to him, Tata's proposed fab and OSAT facilities could fulfil legacy-node chip requirements for automotive electronic control units or specialised vehicle computers.
Also Read | ‘Elon Musk doing amazing work, but…’: Why Sajjan Jindal believes Tesla won’t find it easy in India
China's move to impose over 80% import duties on semiconductor products, in response to US tariffs, is likely to affect traditional semiconductor supply networks. This situation will encourage global automotive manufacturers such as Tesla to diversify their supply sources.
The Chinese electric vehicle manufacturer BYD operates its own semiconductor division. "It becomes a crucial part of Tesla's whole EV plan to have an in-house semiconductor unit, have a steady supply chain as well with multiple vendors not overly dependent on one country," said industry veteran Arun Mampazhy.
Original equipment manufacturers seek robust and varied supply chains, not solely for protection from geopolitical issues, but also to reduce operational disruptions and price fluctuations. Despite strong governmental support, India's semiconductor sector continues to face challenges regarding scale and ecosystem development.
"Partnering with a global EV leader could be catalytic for India's chip ambitions," said analyst Amberkar.
Nevertheless, India must address the technological advantages of China whilst maintaining competitive pricing structures.
Elon Musk announced on X on Saturday about his anticipated visit to India this year.
"Tesla spoke to representatives from the three large semiconductor facilities that have taken off in India — Micron, CG Semi and Tata Electronics," a source told ET. It "called meetings about a month-and-a-half ago… to get a sense of what kind of chips are expected to be packaged, when they'll be ramping up and the timelines for operations."
The Gujarat-based Micron facility aims to provide assembly and testing capabilities, serving both domestic and international markets. CG Semi's unit will focus on OSAT operations. This collaboration between CG Power, Renesas and Stars Microelectronics will primarily serve Renesas whilst catering to global clients.
Various Tata enterprises including AutoComp, Consultancy Services, Technologies and Electronics have established themselves as Tesla's global suppliers, preparing for expanded roles should the EV maker enter India.
Tata Electronics has committed investments of Rs 91,000 crore for a semiconductor manufacturing unit in Dholera, Gujarat, alongside a Rs 27,000 crore OSAT facility planned in Morigaon, Assam.
Murugappa's CG Semi is establishing an OSAT facility in Sanand with an investment of Rs 7,600 crore, alongside Micron's assembly, testing, marking, and packaging (ATMP) facility, valued at over Rs 23,000 crore ($2.7 billion).
Industry experts note that international companies are increasingly considering India for semiconductor operations as they diversify their supply chains. Independent automotive analyst Ashwin Amberkar says, "There are strong indications that Tesla has started engaging suppliers beyond China and Taiwan, with targets set as early as 2025. India is emerging as a serious contender in this shift."
Tesla's Shanghai Gigafactory currently depends on Chinese fabrication facilities for mature-node chips. However, Amberkar notes that escalating geopolitical tensions and cost increases are compelling Tesla to "rethink its sourcing strategy."
Amberkar explains that CG Semi is developing a comprehensive OSAT facility in Gujarat, whilst Micron's Sanand unit will specialise in automotive-grade dynamic random-access memory for computer processors.
According to him, Tata's proposed fab and OSAT facilities could fulfil legacy-node chip requirements for automotive electronic control units or specialised vehicle computers.
Also Read | ‘Elon Musk doing amazing work, but…’: Why Sajjan Jindal believes Tesla won’t find it easy in India
China's move to impose over 80% import duties on semiconductor products, in response to US tariffs, is likely to affect traditional semiconductor supply networks. This situation will encourage global automotive manufacturers such as Tesla to diversify their supply sources.
The Chinese electric vehicle manufacturer BYD operates its own semiconductor division. "It becomes a crucial part of Tesla's whole EV plan to have an in-house semiconductor unit, have a steady supply chain as well with multiple vendors not overly dependent on one country," said industry veteran Arun Mampazhy.
Original equipment manufacturers seek robust and varied supply chains, not solely for protection from geopolitical issues, but also to reduce operational disruptions and price fluctuations. Despite strong governmental support, India's semiconductor sector continues to face challenges regarding scale and ecosystem development.
"Partnering with a global EV leader could be catalytic for India's chip ambitions," said analyst Amberkar.
Nevertheless, India must address the technological advantages of China whilst maintaining competitive pricing structures.
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