[1/2] Visitors stand next to the “Make In India” banner during a three-day semiconductor event in Bengaluru, India, April 30, 2022. REUTERS/Mansif Vengatel/File Photo
NEW DELHI/OAKLAND, CALIFORNIA, June 1 (Reuters) – Majors, including the Foxconn joint venture that made a $10 billion incentive bid for India’s semiconductor buyout, are struggling because of a lack of a technology partner, a major setback for the president’s ambitions. Minister Narendra Modi in the chip industry.
Three people with direct knowledge of the strategy said a planned $3 billion semiconductor facility in India by chip consortium ISMC that considered the Israeli chipmaker a technology partner has been held up due to the company’s ongoing takeover by Intel.
A second massive $19.5 billion plan to build chips domestically through a joint venture between India’s Vedanta and Taiwan’s Foxconn is also moving slowly as their talks about European firm STMicroelectronics (STMPA.PA) as a partner hit a dead end, a fourth source with first-hand knowledge said.
Modi has made the chip industry a top priority of India’s economic strategy because he wants to “usage in a new era in electronics manufacturing” by attracting global companies.
India, which expects its semiconductor market to be worth $63 billion by 2026, last year received three orders to set up factories under the incentive scheme. They were from Vedanta-Foxconn JV; ISMC Global Alliance which Tower Semiconductor (TSEM.TA) is a technology partner; It is IGSS Ventures based in Singapore.
The Vedanta JV plant is set to be located in Modi’s state of Gujarat, while ISMC and IGSS have each earmarked $3 billion for plants in two separate southern states.
The three sources said plans for the $3 billion ISMC chipmaking facility are currently on hold as Tower cannot proceed with signing binding agreements because matters are still under review after it was acquired by Intel for $5.4 billion last year. The deal is pending regulatory approvals.
Speaking about India’s semiconductor ambitions, India’s deputy IT minister, Rajeev Chandrasekhar, told Reuters in a May 19 interview that ISMC “couldn’t continue” because of Intel’s takeover of Tower, and that IGSS “wanted to reintroduce ( request)” to get incentives. “They both had to drop out,” he said, without elaborating.
Two sources said Tower will likely re-evaluate its involvement in the project depending on how its agreement talks with Intel end.
ISMC Next Orbit Ventures consortium partners did not respond to a request for comment. Tower and Intel declined to comment. Singapore-based IGSS and India’s federal Ministry of Information Technology did not respond to requests for comment.
Undo Vedanta
Most of the world’s chip production is limited to a few countries such as Taiwan, and India is a latecomer. With great fanfare, in September, Vedanta-Foxconn JV announced its plans to make chips in Gujarat. Modi called the $19.5 billion plan an “important step” in boosting the ambitions of India’s chip industry.
But things have not gone smoothly as the joint venture is trying to find a technology partner. Vedanta-Foxconn has joined forces with STMicroelectronics to get a license for the technology, said the fourth source, but the Indian government has quoted that it wants STMicro to have “more of a say in the game” – such as a stake in the partnership.
The source added that STMicro is not keen on this and that the talks are still in limbo. “From an STM perspective, this proposal does not make sense because they want the India First market to be more mature,” the person said.
Deputy Information Technology Minister Chandrasekhar told Reuters during an interview on May 19 that Vedanta-Foxconn JV is “currently struggling to get associated with a technical partner”.
STMicro declined to comment.
In a statement, Vedanta-Foxconn JV CEO David Reid said they have an agreement with a technology partner to transfer technology with licenses, but declined to comment further.
In a move seen as reviving investor interest, India’s Information Technology Ministry said on Wednesday that the country will start re-inviting applications for incentives for the chip industry. This time companies can apply until December next year, unlike the initial phase where there was only a 45-day window.
“It is expected that some existing applicants will reapply and new investors will also apply,” Minister Chandrasekhar said on Twitter.
Additional reporting by Aditya Kalra and Munif Vengatil in New Delhi and Jane Lanhi Lee in Auckland; Additional reporting by Stephen Scheer. Editing by Nick Zieminski
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