21 April 2025: In a strategic shift to realign and diversify its global supply chain, American electric vehicle (EV) giant Tesla is actively exploring the potential of India’s nascent semiconductor ecosystem. The Elon Musk-led company is currently in talks with two major players—US-based memory chipmaker Micron and Mumbai-headquartered CG Semi, a subsidiary of the Murugappa Group—to procure key semiconductor components, according to people familiar with the development.
The move follows Tesla’s high-profile agreement last year with Tata Electronics to source semiconductor chips for its global operations. That deal, announced in April 2024, was seen as a significant breakthrough for India’s ambitions to become a player in the global semiconductor landscape.
Now, with Tesla reportedly deepening its engagement in India, industry observers say the move underscores not only the EV maker’s commitment to supply chain resilience but also India’s growing appeal amid rising geopolitical and trade tensions in Asia.
Strategic Realignment in a Shifting Global Landscape
Tesla’s interest in sourcing semiconductor components from India comes at a time when global supply chains are under pressure due to factors such as increasing import tariffs in China, trade restrictions, and the ongoing reconfiguration of tech alliances globally. By establishing procurement relationships in India, Tesla aims to reduce dependency on traditional semiconductor hubs such as Taiwan and China and mitigate the risks associated with over-concentration in specific geographies.
“This is part of a long-term plan,” said a person with direct knowledge of Tesla’s procurement strategy. “The company is evaluating India not just as an emerging market for EVs, but as a strategic partner in the electronics and semiconductor supply chain.”
While Tesla has not officially confirmed its discussions with CG Semi or Micron regarding Indian operations, sources indicate that feasibility studies and early-stage negotiations are underway.
Tata Electronics Deal Set the Stage
Tesla’s agreement with Tata Electronics in 2024 has served as a catalyst for broader semiconductor-related engagement with India. Under that deal, Tata Electronics committed to supplying Tesla with semiconductor chips for use in various models of its EVs and autonomous driving hardware.
At the time, the deal was hailed as a significant milestone in India’s tech manufacturing ambitions, signaling the potential for deeper collaboration between global automotive giants and Indian electronics manufacturers.
Building on that foundation, Tesla’s discussions with Micron and CG Semi suggest a concerted effort to expand its sourcing portfolio in India. While Micron already has a presence in India, including plans for a semiconductor assembly and testing facility in Gujarat, CG Semi is emerging as a notable domestic contender in the space.
India’s Semiconductor Aspirations Take Center Stage
India’s push to position itself as a semiconductor hub has gained traction over the past two years, aided by government-backed incentive schemes, production-linked incentives (PLIs), and partnerships with global technology players. However, scalability remains a challenge due to high capital requirements, technology gaps, and skilled labor shortages.
Despite these hurdles, industry watchers say India offers compelling long-term advantages—including a large domestic market, government support, and increasing geopolitical relevance—as global companies look to diversify their manufacturing and sourcing networks.
“Tesla’s potential expansion into India’s semiconductor ecosystem reflects both opportunity and pragmatism,” said Rajeev Chandrasekhar, India’s Minister of State for Electronics and IT, in a recent industry summit. “We are building an ecosystem that will support advanced electronics manufacturing, and global players are taking note.”
Murugappa Group’s CG Semi: A Rising Star
CG Semi, part of the storied Murugappa Group, has been quietly expanding its capabilities in the semiconductor domain. With operations in chip design, manufacturing support, and testing, the company is positioning itself as a key Indian player in a market traditionally dominated by global giants.
While still in the early stages of scale compared to international peers, CG Semi’s potential tie-up with Tesla could mark a turning point, offering the company a major boost in credibility and global visibility.
“Engagement with a global leader like Tesla could accelerate the maturity of India’s semiconductor sector,” said an industry analyst who tracks EV supply chains. “It will also open the door for other Indian companies to enter the global value chain.”
Looking Ahead: A Win-Win Proposition
If successful, Tesla’s expanded sourcing from India could have wide-ranging implications. For India, it could attract further foreign investment and spur the growth of an indigenous semiconductor supply chain. For Tesla, it offers a more resilient and geographically balanced supplier base at a time when the EV market is poised for explosive global growth.
Tesla’s move also aligns with its broader global strategy. The company has been expanding its manufacturing presence in countries like Germany and Mexico and is eyeing new markets in Asia and the Middle East.
Back in India, speculation continues over Tesla’s potential plans to set up a manufacturing unit or gigafactory, especially after government officials confirmed earlier interactions with Elon Musk during his visit to India.
While concrete details on manufacturing plans remain elusive, the current developments around semiconductor sourcing signal that Tesla is indeed serious about India—not just as a market, but as a partner in innovation and resilience.
As the world’s most valuable carmaker navigates an increasingly complex global trade environment, India may well become a key cog in Tesla’s electric future.
