L&T ventures into the design of fabless semiconductor chips
Larsen and Toubro (L&T) have made a significant strategic move into the fabless semiconductor chip design sector. The company has approved the establishment of a wholly-owned subsidiary that will focus solely on fabless semiconductor chip design and product ownership. This decision to invest 
830 crore in this new subsidiary marks a pivotal shift for L&T. R Shankar Raman, L&T's Chief Financial Officer, highlighted the potential of fabless semiconductor design as a high-technology, lower capital-intensive endeavor. This shift positions L&T to concentrate on R&D for fabless semiconductor chip design, including the possible establishment of an R&D center that could be set up in the United States.
830 crore in this new subsidiary marks a pivotal shift for L&T. R Shankar Raman, L&T's Chief Financial Officer, highlighted the potential of fabless semiconductor design as a high-technology, lower capital-intensive endeavor. This shift positions L&T to concentrate on R&D for fabless semiconductor chip design, including the possible establishment of an R&D center that could be set up in the United States.
The significance of this move lies in L&T's determination to explore the design aspect of semiconductors, where patents and intrinsic value often reside. Raman pointed out, that L&T's strong brand presence and robust engineering capabilities position them favorably for this leap into the semiconductor arena. L&T's existing foothold in the IT & Technology Services (IT&TS) segment equips them with the domain expertise necessary to embark on this new journey. They aim to capitalize on the burgeoning semiconductor industry, where Indian talent is increasingly sought after by multinational corporations. Their strategic geographical focus is the global market, particularly on the United States, Europe and Japan.
L&T is focusing its efforts on the automotive and industrial chip design sectors, which aligns well with their existing engineering capabilities. At this time, they do not intend to invest in chip manufacturing. Instead, they are in the early stages of evaluating their position in the competitive landscape of chip design. During the second quarter of the fiscal year 2023-24, L&T reported a remarkable 45% increase in net profit. This growth was fueled by robust order growth in the infrastructure segment, resulting in a net profit of Rs 3,223 crore, compared to Rs 2,229 crore in the previous fiscal quarter.
During the quarter, L&T experienced a significant increase in their revenue from operations, which soared by 19 percent to reach Rs 51,024 crore. This growth can be attributed to the improved execution of their substantial order book and progress in their projects and manufacturing portfolio. In comparison to the same quarter of the previous fiscal year, where revenue stood at Rs 42,763 crore, this is a remarkable achievement. L&T also achieved the highest-ever order inflow in the history of the company, with orders worth Rs 89,153 crore at the group level during the quarter ending on 30 September 2023. This growth, reflecting a 72 percent increase on a year-on-year basis, marks a remarkable upswing in the company's order book.
