Tesla is in discussions with US memory chip maker Micron as well as Mumbai-based CG Semi, a part of Murugappa Group, to evaluate procurement options as it looks to diversify its global supply chain, said people aware of developments. This follows the Elon Musk-led electric vehicle (EV) maker’s strategic deal with Tata Electronics to acquire semiconductor chips for its global operations, as reported by ET in April last year.
“Tesla spoke to representatives from the three large semiconductor facilities that have taken off in India — Micron, CG Semi and Tata Electronics,” said one of those cited. It “called meetings about a month-and-a-half ago… to get a sense of what kind of chips are expected to be packaged, when they’ll be ramping up and the timelines for operations.”
Micron’s Gujarat facility is slated to enable assembly and test manufacturing, and address domestic and international demand. CG Semi’s facility will look at outsourced semiconductor assembly and test (OSAT). This joint venture between CG Power, Renesas and Stars Microelectronics will have Renesas as an anchor customer, but is expected to also serve others globally.
On Saturday, Elon Musk posted on X that he was looking forward to visiting India this year.Queries sent to Tesla, Tata Electronics, CG Semi and Micron remained unanswered as of press time.
Tata AutoComp, Tata Consultancy Services, Tata Technologies and Tata Electronics have all become global suppliers to Tesla and are bracing for a bigger role if the EV manufacturer expands to India, as reported by ET on March 21.
Tata Electronics is investing over ₹91,000 crore to set up a semiconductor fab unit in Dholera, Gujarat, as well as an OSAT facility for ₹27,000 crore in Morigaon, Assam.
Murugappa’s CG Semi is setting up an OSAT facility in Sanand for ₹7,600 crore, where Micron is also establishing an assembly, testing, marking, and packaging (ATMP) facility, for over ₹23,000 crore ($2.7 billion).
Experts point to global corporations looking to derisk their supply chains increasingly betting on India-based semiconductor operations. “There are strong indications that Tesla has started engaging suppliers beyond China and Taiwan, with targets set as early as 2025. India is emerging as a serious contender in this shift,” said Ashwin Amberkar, an independent automotive analyst.
Tesla’s reliance on Chinese fabs for mature-node chips has been central to operations at its Shanghai Gigafactory. However, growing geopolitical risks and rising costs are pushing Tesla to “rethink its sourcing strategy,” he added.
According to Amberkar, CG Semi is setting up a broad-scope OSAT in Gujarat while Micron’s Sanand plant will focus on automotive-grade dynamic random-access memory required for computer processors.
He said Tata’s planned fab and OSAT facilities could support legacy-node chip requirements for automotive electronic control units or specialised computers fitted into vehicles.
Danish Faruqui, chief executive of US-based semiconductor investment advisory firm Fab Economics, said 28-65 nm nodes and legacy packaging architectures comprise a high double-digit share in the component mix required for EVs.
He estimates that Tesla product platforms and roadmaps are poised for double digit compound annual growth rate in consumption of 28-65 nm nodes products.
“In particular, Battery Management System components’ performance and efficiency are pivotal to players like Tesla’s competitive moat, as it influences battery life and efficiency,” said Faruqui.
The imposition of greater than 80% import tariffs on semiconductor products by China as retaliatory measures towards various US imposed tariffs is also expected to disrupt legacy semiconductor supply chains. This will push automotive players with a global footprint like Tesla to broadbase supply chains.
“New entrants in legacy semiconductor manufacturing and packaging like India are positioned well to benefit from such reorganisation of the supply chain. India presents itself as an alternative for both legacy semiconductors fabrication and packaging, with Micron’s ATMP, CG Power’s OSAT, Tata fab and OSAT all being legacy semiconductor packaging businesses,” he added.
Chinese EV giant BYD has its own semiconductor unit. “It becomes a crucial part of Tesla’s whole EV plan to have an in-house semiconductor unit, have a steady supply chain as well with multiple vendors not overly dependent on one country,” said industry veteran Arun Mampazhy.
While original equipment manufacturers want resilient, diversified supply chains—not just for geopolitical insulation, but also to mitigate operational disruptions and cost volatility—India’s chip sector still faces scale and ecosystem maturity hurdles, despite strong government backing.
“Partnering with a global EV leader could be catalytic for India’s chip ambitions,” said analyst Amberkar.
However, the country will have to reckon with China’s technology and compete intensely on the price front as well.
