Engineering major Larsen and Toubro (L&T) said that it is establishing a subsidiary to enter the fabless semiconductor chip design space.

According to R Shankar Raman, the chief financial officer of L&T, the company has authorised an investment of Rs 830 crore to establish a wholly-owned subsidiary that will be involved in the business of fabless semiconductor chip design and product ownership rather than manufacturing.

A fabless semiconductor company specialises in the design and creation of semiconductor chips, without owning or operating semiconductor manufacturing facilities, commonly referred to as “fabs” or fabrication units.

Unlike chip manufacturing, the fabless approach is a cost-efficient undertaking. These companies focus on designing and marketing hardware and semiconductor chips while subcontracting the manufacturing process to specialised foundries. Consequently, they require less working capital. Prominent global fabless names include NVIDIA, Qualcomm, and MediaTek