Cyient, a Hyderabad-based engineering and technology firm, plans to design chips for automotive, data center, medical, and aerospace and defense applications using its 800-900 intellectual property rights.

In April 2025, the company demerged its semiconductor business into a wholly owned subsidiary, Cyient Semiconductors, to focus on this sector.

Cyient Semiconductors will develop application-specific integrated circuit (ASIC) solutions for global clients through a fabless model, and has formed a strategic tie-up with processor technology company MIPS to work on specialized ASIC and application-specific standard product (ASSP) solutions using the MIPS Atlas processor portfolio.

The company plans to invest US$100 million in Cyient Semiconductors over the next one to two years.

Cyient subcontracts the manufacturing of about 5 million chips to global foundries, and its operations remain unaffected by US-China trade tensions or disruptions in critical mineral supplies, said managing director Krishna Bodanapu.

🔗 Source: The Economic Times

🧠 Food for thought

1️⃣ Cyient’s timing leverages the global semiconductor supply chain rebalancing

Cyient’s $100 million semiconductor investment comes at a strategic moment when countries are actively diversifying their chip supply chains after major disruptions.

The U.S. semiconductor manufacturing share fell from 40% in 1990 to just 12% today, prompting the $52 billion CHIPS Act to rebuild domestic capabilities1. Similarly, major players like TSMC have committed $100 billion over three years while Intel allocated $20 billion for new U.S. factories23.

This rebalancing creates opportunities for companies like Cyient that can provide design services without the massive capital requirements of manufacturing. Building new semiconductor factories costs $5-15 billion and takes 4-6 years before production begins3, making fabless models increasingly attractive.

Cyient’s recent partnerships with GlobalFoundries and MIPS demonstrate how design companies can access manufacturing capacity and processor IP without these enormous upfront investments45.

2️⃣ The fabless model offers resilience during supply chain volatility

Cyient’s approach of subcontracting manufacturing for 5 million chips while owning 800-900 intellectual property rights positions them well during ongoing supply chain uncertainties.

The semiconductor shortage that began in 2020 extended lead times from typical weeks to over 20 weeks by mid-2021, severely impacting companies with fixed manufacturing assets2. Major automakers like Ford and GM had to temporarily close plants due to chip shortages2.

TSMC’s significant market share in automotive and mobile semiconductors means that fabless companies with established foundry relationships maintain better supply chain flexibility3. This allows companies like Cyient to leverage existing manufacturing capacity rather than building their own facilities.