Cyient Allocates Around Rs 860 Crore For Newly-Formed Semiconductor Subsidiary

Cyient Ltd. on Tuesday said that it will allocate $100 million (about Rs 860 crore) for its new fully-owned semiconductor subsidiary, Cyient Semiconductors.

"This strategic move strengthens the company’s commitment to innovation and excellence across the global semiconductor landscape," the company's press release stated.

Cyient's Executive Vice Chairman and Managing Director Krishna Bodanapu said that the board has already committed $100 million for the new venture and it will also be looking to raise more resources from external investors.

By September, the Hyderabad-headquartered company also plans tap an external investor to raise more funds and is in the process of appointing merchant bankers for the same, officials said.

Bodanapu said that the money will be deployed towards talent-intensive research and development efforts.

According to him, the company is targeting to offer customised silicon chip solutions to a variety of industries, both globally and domestically, including electric vehicles and discoms, which need smart meters.

Bodanapu said that while demand for such solutions is very high, the subsidiary will also focus on intellectual property creation to grow the new business. He added that the developing geopolitics may act as a tailwind.

Eventually, Bodanapu said, the parent company plans to list the arm on the markets. Another senior official added that for its expansion, the company will aim at raising the capital from financial investors and family offices.

While Cyient is already engaged in the business and has deployed 40 customised chips for clients till now, the carving out of the business as a wholly owned subsidiary will help better focus and capitalise on the opportunities, Suman Narayan, the chief executive of the newly created business, said.

He added that Cyient Semiconductors will offer customised silicon chip solutions to various industries and focus on intellectual property creation in more mature, higher NM chips. It will not focus on the higher-end, lower nanometer chips dominated by the likes of Nvidia.

Over 60% of the costs for the business is talent, Narayan said and added that the new capital infusion will help the company in making the right investments.

The semiconductor market is valued at approximately $600 billion and is projected to reach $2 trillion by 2032.

The new subsidiary will tap into this high-growth opportunity, focussing on developing fabless semiconductor solutions while addressing the increasing demand for specialised semiconductor expertise, the statement added.

Shares of Cyient closed 2.8% higher at Rs 1,153.8 apiece on the BSE, compared to a 1.49% advance in the benchmark Sensex. 

(With PTI inputs)