Fri, Jun 02, 2023 page12

• Modi’s chipmaking plan flounders as firms struggle to find tech partners

  • Reuters, NEW DELHI and OAKLAND, California
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  Big companies including a Foxconn Technology Group (富士康科技集團) joint venture (JV) that bid for India’s US$10 billion semiconductor incentives are struggling due to the lack of a technology partner, a major setback for Indian Prime Minister Narendra Modi’s chipmaking ambitions.

  A planned US$3 billion semiconductor facility in India by India Semiconductor Manufacturing Co (ISMC) that counted Israeli chipmaker Tower Semiconductor Ltd as a tech partner has been stalled due to the company’s ongoing takeover by Intel Corp, three people with direct knowledge of the strategy said.

  A second mega US$19.5 billion plan to build chips locally by a joint venture between India’s Vedanta Ltd and Foxconn, known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan, is also proceeding slowly as their talks to rope in European chipmaker STMicroelectronics NV (STM) as a partner are deadlocked, a fourth source with direct knowledge said.

  

  Visitors stand next to a “Make In India” logo during a three-day semiconductor event in Bengaluru, India, on April 30.

  Photo: Reuters

  Modi has made chipmaking a top priority for India’s economic strategy as he wants to “usher in a new era in electronics manufacturing” by luring global companies.

  India, which expects its semiconductor market to be worth US$63 billion by 2026, last year received three applications to set up plants under the incentive scheme. They were from the Vedanta-Foxconn JV; a global consortium ISMC which counts Tower Semiconductor as a tech partner; and from Singapore-based IGSS Ventures Pte Ltd.

  The Vedanta JV plant is to come up in Modi’s home state of Gujarat, while ISMC and IGSS each committed US$3 billion for plants in two separate southern states.

  The three sources said ISMC’s US$3 billion chipmaking facility plans are on hold as Tower could not proceed to sign binding agreements because things remain under review after Intel acquired it for US$5.4 billion last year. The deal is pending regulatory approvals.

  Talking about India’s semiconductor ambitions, Indian Minister of State for Skill Development and Entrepreneurship Rajeev Chandrasekhar said in a May 19 interview with Reuters that ISMC “could not proceed” due to Intel acquiring Tower, and IGSS “wanted to resubmit” the application for incentives.

  The “two of them had to drop out,” he said, without elaborating.

  Tower is likely to re-evaluate taking part in the venture based on how its deal talks with Intel pan out, two of the sources said.

  ISMC consortium partners Next Orbit Ventures did not respond to a request for comment. Tower and Intel declined to comment.

  Singapore-based IGSS and India’s Ministry of Electronics and Information Technology did not respond to requests for comment.

  Most of the world’s chip output is limited to a few countries like Taiwan, and India is a late entrant. Amid much fanfare, in September last year, the Vedanta-Foxconn JV announced its chipmaking plans in Gujarat. Modi called the US$19.5 billion plan “an important step” in boosting India’s chipmaking ambitions.

  However, things have not gone smoothly as the joint venture tries to hunt for a tech partner. The fourth source said Vedanta-Foxconn had got on board STMicroelectronics for licensing technology, but the Indian government had conveyed it wants STMicro to have “more skin in the game” — like a stake in the partnership.

  STMicro is not keen on that and the talks remain in limbo, the source added.

  “From STM’s perspective, that proposal doesn’t make sense because they want India market to first be more mature,” the person said.

  Chandrasekhar told Reuters during the interview the Vedanta-Foxconn JV was “struggling currently to tie up with a technology partner.”

  STMicro declined to comment.

  In a statement, Vedanta-Foxconn JV chief executive David Reed said they have an agreement with a technology partner to transfer technology with licenses, but declined to comment further.

  In a move seen to revive investor interest, India’s IT ministry on Wednesday said the country would start reinviting applications for chipmaking incentives. This time the companies can apply until December next year, as opposed to the initial phase where there was only a 45-day window.

  “It is expected that some of current applicants will reapply and new fresh investors will also apply,” Chandrasekhar said on Twitter.
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