Vedanta & Foxconn to Form JV for Semiconductor Manufacturing
Indian metals and mining conglomerate Vedanta Ltd. on 14th February 2022 announced signing a pact with Taiwanese electronics manufacturing services company Foxconn (Hon Hai Technology Group) to form a joint venture (JV) for manufacturing semiconductors in India. Vedanta is planning to invest around $8.4 Billion in a phased manner to setup the semiconductor manufacturing unit.
Foxconn is well known for assembling and manufacturing parts for Apple Inc.
Vedanta First to Enter Semiconductor Manufacturing after GoI’s INR 76,000 Crore PLI Programme
Vedanta is the first Indian company to make the announcement to invest in semiconductor manufacturing after the Indian Government announced a Rs 76,000-crore PLI (Production Linked Incentive) programme to boost electronic chip and display ecosystem in the country.
This is also the second attempt of Vedanta to enter the electronics / semiconductor space after its earlier plans to set up a display unit with about Rs 60,000 crore investment that could not take off.
According to the MoU (memorandum of understanding) signed between the two companies, Vedanta will hold the majority equity in the JV, while Foxconn will be the minority shareholder. Vedanta Chairman, Mr. Anil Agarwal will be the Chairman of the joint venture too.
Vedanta’s Future Plans for Semiconductor Business
Vedanta will be manufacturing 28 nm node of chipsets which has maximum demand in the Indian market. The company will be looking to cater to smartphone makers and consumer electronics segments including laptops and televisions apart from ICTs, defence and some use cases of the automotive sector.
Vedanta Group is currently in talks with the Gujarat, Telangana, Maharashtra and Karnataka state governments among others, evaluating incentives and access that these regions could provide.
In a press statement Mr. Akarsh Hebbar, Global Managing Director of Vedanta Group’s Display and Semiconductor business said “We will invest $15 billion in the ecosystem in the 10-15 year plan. First phase will be of $7-8 billion for semiconductor facility and around $3-4 billion for display fab”.
India’s Semiconductor Manufacturing to Impact Chinese Imports
In 2020, India’s demand for semiconductor was of $24 billion and is expected to reach about $100 billion by 2025. Currently, most of the demand is met by imports from China because of lack of local manufacturing. The move to set up a joint venture between companies of India and Taiwan could be worrisome for China as it will dent its imports to India.
India and Taiwan have been in talks to bring in chip manufacturing to South Asia since September last year. Officials of the two countries had discussed plans to bring in a chip plant to India. Back then, Taipei officials had sought tariff reductions on items used to make semiconductors under a bilateral investment agreement. While India with such ventures is looking to bring in technology investments into the country, Taiwan wants to strengthen its diplomatic presence among nations amid China’s attempts to unify the island with its mainland.