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Why Hero-owned semiconductor firm Tessolve acquiring Dream Chip Technologies is crucial for India

While India has been globally noted in semiconductor design with global companies setting up their R&D as well as GCCs in the country, efforts on the other aspects like manufacture is a long haul and remains to be seen

(Left) Jens Benndorf, CEO of Dream Chip Technologies in Germany, and Srini Chinamilli, co-founder & CEO of Tessolve

Hero-owned semiconductor engineering firm Tessolve announced on Wednesday that it is acquiring European chip design firm Dream Chip Technologies, in what could signal a new way forward for India to leapfrog ahead in the lately crucial global semiconductor race.

The deal is worth Rs 400 crore. Bengaluru-based Tessolve is a division of Hero Electronix, owned by the Munjal family behind Hero, the world’s largest selling motorcycle brand.

There have been major developments in recent months in India on the semiconductor front, ever since the nation formulated a Semiconductor Mission in end-2022 on the heels of the global supply chain breakdown post-COVID-19 which saw semiconductor chips in short supply, leading to anyone from electronics makers to the auto sector falling behind in production.

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Semiconductors, essentially made up of millions and millions of transistors, form the backbone of computing, powering everything from smartphone to household electonic appliances and increasingly, cars and bikes. In the last few days, Nvidia, a software and fabless company which designs and supplies GPUs, System-on-a-Chip units as well as APIs for high-performance computing, had brushed past Apple as the world’s most valuable company.

While India has been good in the chip design side, it is now looking to make a mark in semiconductor production as well. However, this is easier said than done. Big conglomerates like Vedanta had made grandiose announcements on it, though nothing much has come out of it yet. Tata is the latest biggie announcing semiconductor fab in the country. The field is currently dominated by the likes of US, Taiwan and Japan, while China has been gaining ground.

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Prime Minister Narendra Modi had recently remarked that semiconductor sector will become big in India in the next five years. While the nation has been globally noted in semiconductor design with global companies setting up their R&D as well as GCCs in the country, efforts on the other aspects like manufacture is a long haul and remains to be seen. However, moves like Tessolve’s takeover of Dream Chip will ensure that India’s domination in the chip design side of it, at least, will not be challenged so quickly.

“This acquisition solidifies our position as a top-tier semiconductor engineering firm globally with unmatched design to productisation capabilities,” said Srini Chinamilli, co-founder & CEO of Tessolve. “Dream Chip’s capabilities further strengthen our ability to take on leading edge ASIC design projects and greatly enhances our European footprint.”

Ujjwal Munjal, chairman of Tessolve, said, “With the synergy brought by Dream Chip Technologies, Tessolve is poised to become a world leader in this space with unparallelled capabilities. As major companies increasingly shift towards custom chip design, this acquisition positions Tessolve more strongly than ever to meet the growing demands of the custom chip market.”