Tesla is actively engaging with India’s semiconductor sector as part of a strategic effort to diversify and secure its global supply chain for key electric vehicle (EV) components.

In recent weeks, Tesla has held discussions with major players in India’s emerging chip ecosystem, including US memory chipmaker Micron, Mumbai-based CG Semi (part of the Murugappa Group), and TATA Electronics. These talks are aimed at evaluating procurement options, understanding the types of chips to be produced, production ramp-up schedules, and operational timelines for the new facilities coming online in India.

This outreach follows Tesla’s earlier strategic agreement with TATA Electronics to source semiconductor chips for its global operations—a move that underscores the EV giant’s growing reliance on India as a credible alternative to traditional supply bases in China and Taiwan.

TATA Electronics is making significant investments, with over ₹91,000 crore allocated for a semiconductor fabrication unit in Dholera, Gujarat, and ₹27,000 crore for an OSAT (Outsourced Semiconductor Assembly and Test) facility in Morigaon, Assam.

Similarly, CG Semi is setting up an OSAT facility in Sanand, Gujarat, in partnership with Renesas and Stars Microelectronics, and Micron is establishing an assembly, testing, marking, and packaging (ATMP) facility in the same region, with an investment exceeding ₹23,000 crore.

Tesla’s interest in India is driven by several factors:

Geopolitical Risks And Cost Pressures: The company is looking to reduce its dependence on Chinese fabs for mature-node chips, especially as geopolitical tensions and tariffs have made the existing supply chain more volatile and costly.

Legacy-Node Chip Demand: A significant portion of EV components, particularly for battery management systems, safety ECUs, and infotainment units, rely on legacy-node chips (typically 28-65nm). India’s new facilities are focusing on these nodes, which are crucial for Tesla’s product platforms and growth projections.

Government Support: India’s government has rolled out a comprehensive EV policy and substantial incentives to attract global manufacturers and semiconductor investments, further enhancing the country’s appeal as a supply chain hub.

Supply Chain Resilience: By engaging with multiple Indian suppliers, Tesla aims to build a more resilient and diversified supply chain, minimising the risk of disruptions from any single country or region.

Industry experts note that this shift is not just about geopolitical insulation but also about operational flexibility and cost management. While India is still developing the scale and ecosystem maturity needed to compete with established semiconductor hubs, partnerships with global leaders like Tesla could accelerate the sector’s growth and global integration.

However, India will need to address challenges related to technology, pricing, and ecosystem development to fully capitalise on this opportunity and compete with China’s established dominance in the field.

Tesla’s push to involve India in its integral parts supply marks a significant step in the global reorganisation of semiconductor supply chains, with India poised to play a pivotal role in the EV industry’s future.

Agencies