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L&T Semiconductor Plans $150 Million Annual Contracts with Auto Giants

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Synopsis:

L&T Semiconductor Technologies, a unit of Larsen & Toubro, will secure $150 million in contracts with six automobile firms by September. The company, focusing on automotive chip design, anticipates $1 billion in annual revenue within seven years.

L&T News Today

L&T Semiconductor Technologies, a newly established chip design unit under India's leading infrastructure firm Larsen & Toubro (L&T), is set to sign contracts worth $150 million annually with six prominent automobile companies by the end of September 2024.

This marks a significant milestone for the company, which was launched in November 2023 with a $100 million investment from its parent firm. As a result, L&T shares price will remain in focus today.

Focus on the Automotive Sector

The company, led by CEO Sandeep Kumar, has strategically focused its efforts on the automotive sector. Kumar highlighted the long-term potential of the automotive industry, noting that once a company is integrated into the automotive supply chain, the business tends to last for at least a decade.

L&T Semiconductor is expected to sign contracts with three Indian automobile manufacturers within two weeks and finalise agreements with three European automotive firms by the end of September. The names of these clients remain undisclosed.

Competing with Global Leaders

L&T Semiconductor's entry into the automotive chip design market positions it against established global players like Qualcomm and NXP Semiconductors. The company specialises in designing chips for various car functions, including window operations, air conditioning, and power delivery systems.

Unlike its competitors, L&T Semiconductor does not currently manufacture the chips it designs but has long-term plans to establish its manufacturing facility.

Future Plans and Revenue Projections

Kumar revealed that the company aims to build a semiconductor fabrication facility once it has a clear path to achieving $1 billion in annual revenue. He projects that L&T Semiconductor could reach this revenue milestone within the next seven years, contingent upon a robust product pipeline and a secure customer base.

Stock Performance

On Tuesday, the parent company L&T’s share price closed at ₹3,551.00, reflecting a modest decline of 0.59%. However, the stock has given a decent return of 33.50% over the past 12 months. Investors will be keenly monitoring L&T's share price movement to assess the impact of the latest announcement.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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