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In September 2022, the Centre hailed Vedanta and Foxconn’s semiconductor manufacturing plant in Gujarat as a landmark. Chief Minister Bhupendra Patel and IT Minister Ashwini Vaishnaw attended the signing of an MoU with the state government in Gandhinagar.
“Foxconn is working to remove the Foxconn name from what now is a fully-owned entity of Vedanta. Foxconn has no connection to the entity and efforts to keep its original name will cause confusion for future stakeholders,” it said in a statement.
Foxconn has given no reason, but it is understood that the ability of Vedanta, which is reeling under a heavy debt load, to pay for acquiring the necessary technology for chipmaking played a key role.
“We were aware that the joint venture was not going well, there were some differences, and it became clear to us a few months ago that Foxconn was going to pull out,” a senior government official said. The official added that the government is in touch with Foxconn, and is “encouraging it to set up a fab [lab] independently”.
In a statement, Vedanta said it had “lined up other partners to set up India’s first foundry”.
“We will continue to grow our semiconductor team, and we have the licence for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM). We will shortly acquire a licence for production-grade 28 nm as well,” Vedanta said.
The government will evaluate Vedanta’s proposal. However, without Foxconn, the application is not likely to move forward, it is learnt.
What about the other proposals?
It is not just the Vedanta-Foxconn proposal — two other proposals for India’s $10 billion chip incentive scheme too remain uncertain.
ISMC, backed by Abu Dhabi-based Next Orbit and Israel’s Tower Semiconductor, has asked the Centre not to consider its proposal owing to a pending merger between Intel and Tower Semiconductor. The merger was announced more than a year ago, but has not moved ahead.
The consortium had initially said it would set up a $3 billion semiconductor fab in Karnataka. But the proposal is not expected to move until Intel’s merger with Tower is complete.
The other proposal, by Singapore-based IGSS Venture, was not found up to the mark by the advisory committee of the government and is on the back burner, it is learnt.
India has identified electronics manufacturing as a key sector in the coming years — both to produce goods for the domestic market, and for export. While some manufacturing schemes, for smartphones for example, have taken off (with Apple in the lead) the process is largely centred around assembling various components imported from elsewhere.
Prime Minister Narendra Modi has made chip manufacturing a top priority for India’s economic strategy. He wants to “usher in a new era in electronics manufacturing” by getting global companies to come to India.
Building semiconductors in India is crucial for the government’s vision to develop a domestic electronics supply chain and eventually reduce imports — especially from China which, despite some challenges, remains the number one destination for such manufacturing.
All electronics items have semiconductor chips in them — and as more companies try to diversify their bases from China, India has an opportunity to emerge as a reliable destination.
The US passed the CHIPS Act last August, providing a $280 billion subsidy for manufacturing chips in the country. It has also imposed additional restrictions and sanctions that impact China’ semiconductor industry.
