Tata Electronics Eyes Malaysia Expansion with Chip Fab Acquisition Plans

In a significant step towards expanding its global footprint, Tata Electronics’ Malaysia acquisition plans have come into focus. The company is reportedly in advanced discussions to acquire a chip fabrication (chip fab) facility in Malaysia. According to The Economic Times. Tata Electronics is reportedly in discussions with multiple global semiconductor firms, such as X-Fab, DNeX, and Globetronics.

The Malaysian government has been in talks with Tata Electronics over a potential acquisition of an OSAT Facility (Outsourced Semiconductor Assembly and Test) plant. Such a facility focuses on assembling, testing, and packaging semiconductors—critical steps in the chip-making process. This deal, if finalized, will give Tata Group a strategic base outside India to serve global chip clients more efficiently.

Tata Electronics Moves Beyond India’s Borders

Even though Tata Electronics is investing ₹91,000 crore to establish a semiconductor fabrication plant in Dholera, Gujarat, and an additional ₹27,000 crore for an OSAT facility in Morigaon, Assam. The fab chip deal between Tata Electronics and Malaysia would establish the Group’s first step outside India into the semiconductor business.

KC Ang was appointed as the President and the Head of Tata Semiconductor Manufacturing in April and is leading the deal. People close to the deal said, “Globetronics and DNeX’s SilTerra facility are among the front runners to be acquired by Tata Electronics.”

The planned acquisition aligns with the Tata Group’s broader strategy to become a key player in the semiconductor supply chain. Malaysia, with its skilled workforce, strong infrastructure, and supportive government policies, offers an ideal setting for such a foray. The deal is also seen as an opportunity for Tata Electronics to de-risk its supply chain while gaining access to global markets.

India’s Semiconductor Dreams Get A Boost

The news of this potential overseas move comes as Tata Electronics’ semiconductor funding in India gains momentum. The Indian government recently approved significant funding to support domestic semiconductor manufacturing under the India Semiconductor Mission. Tata Electronics is among the key beneficiaries of this support, which has already helped fast-track the company’s local plans.

Analysts note that Malaysia’s strengths in assembly, testing, marking, and packaging (ATMP), combined with its well-developed ecosystem, skilled talent pool, strong supply chain, and supportive government policies, make it a favored destination for semiconductor investments.

Apart from that, Malaysia’s National Semiconductor Strategy, announced in May 2024, sets up strong incentives to invite international investment. Many Indian companies want to invest in manufacturing grade technology (MGT) from Malaysia to aid their OSAT efforts because the country is well-known for both old and new semiconductor packaging.

The Malaysian Investment Development Authority reported in February 2022 that Malaysia has a 13% share of the global market for chip packaging, assembly and testing.

Consultancy firm Fab Economics’ CEO Danish Faruqui said, “MGT can only come from an established player in the semiconductor industry who has IP defensibility for its technology and has the legal rights to license it to India.”

Building a Global Semiconductor Ecosystem

Tata Electronics’ OSAT plans in Malaysia will allow the company to offer complete chip production, assembly and packaging services. This is expected to attract major chip designers and OEMs looking for alternative partners beyond the dominant players in Taiwan and South Korea.

By establishing an international base, Tata Electronics is set to emerge as a serious global player in the chip assembly space. If the acquisition proceeds as expected, it would mark a new chapter in India’s ambitions to be part of the global chip supply chain, not just as a buyer, but also as a supplier and partner.

Counterpoint Research senior analyst Parv Sharma said, “If Tata were to have a partnership or presence in Malaysia, it would enable Tata to develop expertise in ATMP, and it would complement the wafer fabrication and OSAT (operations) in India. It would also de-risk Tata from current semiconductor tariffs and provide a risk-free supply chain to serve a wider customer base globally.”