Larsen & Toubro’s (L&T) whole-owned subsidiary L&T Semiconductor Technologies (LTSCT) signed an agreement on Monday for acquisition of 100% stake in Bengaluru-based SiliConch Systems for a cash consideration of Rs 183 crore.
“The acquisition is expected to add intellectual property (IP), engineering skillsets and design expertise to strengthen the Group’s presence in fabless semiconductor business, and thus aligns with the overall growth strategy of LTSCT,” L&T said in a regulatory filing on Tuesday.
With a team of 61 employees, SiliConch is an 8-year-old fabless (without fabrication units) semiconductor design company which develops system-on-chip IP, and has 30 granted patents globally.
Under the terms of the agreement, an upfront amount of Rs 133 crore is payable at closing and a deferred amount of Rs 50 crore payable over 4 years, subject to adjustments, approvals and achievement of certain targets and other conditions.
Mumbai-headquartered L&T, a $27 billion multinational conglomerate which invested Rs 850 crore in setting up LTSCT last year, expects the acquisition of SiliConch to be completed by 15 September, 2024, after meeting all the conditional requirements.
Started in April 2016, SiliConch Systems specialises in the development/design of semiconductor IP / integrated circuits (IC).
In past three years starting FY24, FY23 and FY22, it reported an operational revenue or turnover of Rs 27.68 crore, Rs 19.97 crore and Rs 11.02 crore, respectively.
SiliConch generates revenue primarily as non-recurring engineering revenue and license fees. The end customers of IP’s delivered by SiliConch are original equipment manufacturers and/or fabless integrated chip companies, primarily in the US, who provide power management systems for smartphones, personal computers, automotive, Internet of Things and accessories, L&T added in the filing.
In the growing semiconductor market, several firms are taking the acquisition route to expand their businesses in the space.
On Monday, Accenture, the world’s largest IT services giant acquired Bengaluru-based semiconductor design services firm Excelmax Technologies to bolster its growing silicon design and engineering capabilities. Early this year, homegrown software services giant Infosys had picked up stake in Bengaluru’s semiconductor design and embedded services provider InSemi. Infosys has cited a $500 billion opportunity in engineering services and semiconductors space.
The central government in its interim budget 2024-25 also allocated Rs 6,903 crore to support the development of semiconductors and display manufacturing ecosystems. In December 2021, the government had announced India Semiconductor Mission with a $10 billion (Rs 76,000 crore) worth incentive scheme for the same.
Source: Economic Times