Tesla eyes India venture to tackle global supply-chain turmoil and geopolitical crisis

As geopolitical tensions are on the rise and the subsequent pandemic era disrupts business growth, Tesla is quietly exploring alternative suppliers in India as it diversifies its semiconductor supply chain away from China. Sources report that Tesla has held talks with three major Indian chip ventures – US memory giant Micron’s new Gujarat assembly/testing plant, CG Semi (a Murugappa Group-led OSAT project), and Tata Electronics.

Micron’s USD 2.7 billion Gujarat facility is slated for automotive-grade chip assembly and test, CG Semi’s Sanand unit (a JV with Japan’s Renesas and Taiwan’s Stars Microelectronics) will perform outsourced semiconductor assembly and test (OSAT) for Renesas and others, and Tata Electronics has announced massive investments for a fab in Dholera (Gujarat) plus INR 27 billion (approx. USD 319.39 million) for an assembly and test plant in Assam. These legacy-node facilities (28-65 nm) cater to EV components (battery controllers, ECUs, infotainment) and enjoy Indian government support, wherein the Union Cabinet recently approved Tata Electronics’ INR 91 billion (USD 1.08 billion) semiconductor fab plan.

Tesla’s pivot to India comes just after the United States and European demand for EVs softened. Global supply chains are being ‘rethought’ in response to shocks. An independent analyst has noted in the context that Tesla’s Shanghai gigafactory still relies on Chinese fabs for mature-node chips, but “escalating geopolitical tensions and cost increases” are forcing the company to reconsider its sourcing strategy.