Japanese Renesas and Indian Tata Motors are teaming up to develop semiconductor solutions

Japanese chip maker Renesas Electronics Corp and India’s Tata Motors have partnered to design, develop and manufacture semiconductor solutions, the firms said on Wednesday.

The main reason is that the persistent global shortage of semiconductor chips has hampered the automotive and electronic industries, forcing production cuts and highlighting the global reliance on multiple sources such as Taiwan.

Renesas will partner with Tata Motors, India’s largest electric vehicle manufacturer, to develop “next-generation automotive electronics” to increase the number of electric vehicles, the company says.

“The collaboration will accelerate our presence in these areas in India as well as globally,” said Natarajan Chandrasekaran, chairman of holding company Tata Sons.

Areas of collaboration the companies are considering include partnerships in new automotive technologies such as advanced driver assistance systems (ADAS) as well as wireless networking solutions, including 5G.

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Renesas will work with the group’s Tata Tejas Networks to manufacture products initially for India and then for global markets.

India is seeking to subsidize the domestic construction of semiconductor and display factories so as not to suffer from intermittent supplies.

Its $10 billion incentive plan has attracted bids from firms such as a joint venture between local Vedanta (NYSE:VEDL) and Taiwan’s Foxconn, as well as Singapore’s IGSS Ventures.

Oil and metal refinery Vedanta wants to invest $20 billion in two chip and display factories, while jeweler Rajesh Exports inserts $3 billion to an electronic display factory.

India plans to reach $63 billion domestic chip market by 2026 from $15 billion in 2020.