Larsen & Toubro’s (L&T) wholly-owned subsidiary, L&T Semiconductor Technologies (LTSCT), has signed an agreement to acquire a 100% stake in Bengaluru-based SiliConch Systems for a cash consideration of Rs 183 crore.
The acquisition aims to enhance LTSCT’s intellectual property (IP), engineering skillsets, and design expertise, thereby strengthening its position in the fabless semiconductor business. “This acquisition aligns with the overall growth strategy of LTSCT,” L&T stated in a regulatory filing on Tuesday.
The deal includes an upfront payment of Rs 133 crore at closing and a deferred amount of Rs 50 crore payable over four years, subject to adjustments, approvals, and the achievement of specific targets and conditions. L&T anticipates completing the acquisition by September 15, 2024, after fulfilling all necessary requirements.
Founded in April 2016, SiliConch Systems is a fabless semiconductor design company that develops system-on-chip IP and holds 30 granted patents globally. The company, with a team of 61 employees, specializes in the development and design of semiconductor IP and integrated circuits (IC). Over the past three years, SiliConch reported operational revenues of Rs 27.68 crore (FY24), Rs 19.97 crore (FY23), and Rs 11.02 crore (FY22).
SiliConch’s revenue primarily comes from non-recurring engineering and license fees. The company’s IPs cater to original equipment manufacturers and fabless integrated chip companies in the US, serving sectors such as smartphones, personal computers, automotive, Internet of Things, and accessories.
The acquisition comes amid a growing trend in the semiconductor market, where firms are expanding through strategic acquisitions. On Monday, Accenture acquired Bengaluru-based semiconductor design services firm Excelmax Technologies to bolster its silicon design and engineering capabilities. Earlier this year, Infosys acquired a stake in InSemi, a Bengaluru-based semiconductor design and embedded services provider, highlighting a $500 billion opportunity in engineering services and semiconductors.
The central government, in its interim budget for 2024-25, allocated Rs 6,903 crore to support the development of semiconductor and display manufacturing ecosystems. In December 2021, the government announced the India Semiconductor Mission, with a $10 billion (Rs 76,000 crore) incentive scheme to foster the sector’s growth.
L&T’s strategic acquisition of SiliConch Systems underscores its commitment to expanding its semiconductor capabilities and aligns with the broader industry trend of leveraging acquisitions for growth. This move positions L&T to capitalize on the burgeoning opportunities in the semiconductor market.
