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Vedanta Signs MoUs with Gujarat Govt for Rs 1.54 Lakh Cr Semiconductor and Display Unit

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Indian metals and mining company, Vedanta Ltd., stated in its press release dated 13th September 2022, that the company has signed two Memoranda of Understanding (MoUs) with the Gujarat Government. These MoUs are for setting up a semiconductor fabrication unit, a display fabrication unit and a semiconductor testing and assembling unit in the Ahmedabad district with a total investment of Rs. 1.54 lakh crore. These units will provide employment to around 1 lakh people.

Vedanta – Foxconn’s Investment to Fuel Semiconductor Chipset and OLED Display Production

Out of the total investment amount of Rs. 1.54 lakh crore, about Rs. 94,500 crore will be used to set up a display fabrication unit which will be 100% owned by Vedanta. The remaining amount of approximately Rs. 60,000 crore will be invested by the Vedanta-Foxconn JV, and it will be utilised for setting up a semiconductor fabrication unit, and a Semiconductor Assembly and Testing (OSAT) unit. In an OSAT unit, third-party Integrated Circuit (IC) packaging and testing facilities are provided.

Vedanta specified that the upcoming semiconductor fabrication unit will be working on 28 nanometre (nm) chipset nodes. These nodes have a wide range of applications which include usage in Central Processing Units (CPUs), Graphic Processing Units (GPUs), home entertainment systems, smartphones and various other consumer electronics.

Moreover, the upcoming display fabrication unit will be capable of rolling out Generation 8 displays for small, medium and large applications. Generation 8 displays are capable of having a larger glass substrate. This means that larger Organic Light Emitting Diode (OLED) displays can be manufactured efficiently. This display fabrication unit will be owned solely by Vedanta, as stated by Mr. Anil Agarwal, Chairman, Vedanta Group. The company already has display fabrication units in Korea and Taiwan.

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Operations at Foxconn’s Semiconductor unit

Foxconn to be Technological Partner, Vedanta to Diversify into Semiconductors

Vedanta and Taiwan’s Foxconn (Hon Hai Technology Group), had announced in February 2022 that they will be forming a joint venture (JV) for developing a semiconductor plant in India.

As per Vedanta’s press release, it will hold 60% of the equity in the Vedanta – Foxconn joint venture, while Foxconn will own the remaining 40%.

In an interview with CNBC-TV18, Mr. Anil Agarwal stated that 38% of the equity in the Vedanta-Foxconn JV will be held by the Foxconn, while Vedanta would hold the remaining stake. Mr. Agarwal elaborated that Foxconn will be bringing in its technical know-how and investment, while Vedanta will be helping with various clearances and the local support required for setting up the plant.

Speaking about the upcoming semiconductor fabrication unit Mr. Anil Agarwal said, “Chairman Wong (of Foxconn) is very very keen to start this project as soon as possible, and he is confident that we’ll be able to produce first product within two years’ time“.

He further said that the Semiconductor Unit will be funded through equity that will be brought in by Foxconn and a mix of debt and equity to be brought in by the listed entity, Vedanta Ltd.

Semiconductor Demand Scenario in India and Need for Indigenous Fabrication Units

Responding to a question asked on 20th July 2022 in the Lok Sabha, India’s Minister for Electronics and Information Technology, Mr. Ashwini Vaishnaw had stated that the value of semiconductors consumed in India in 2020 stood at about Rs. 1.1 lakh crore. He further stated that this demand was fulfilled by imports due to lack of commercial semiconductor fabrication units in the country.

The value of Indian semiconductor market is expected to reach USD 63 billion (over Rs. 5 lakh crore) by 2026 as per the Government.

Vedanta – Foxconn’s Semiconductor fabrication plant will be India’s first, thus reducing the country’s reliance on imports from other countries like Hong Kong, Vietnam, Taiwan, Thailand and China. “All the countries which produce this (semiconductor chipsets), they export. India is the only place where you produce and you can consume also“, said Mr. Agarwal in the interview with CNBC-TV18.

Vedanta has stated that this project will attract players from the electronics ecosystem, including manufacturers of sensitive electronic equipment and equipment service providers. “It will create clusters in various states“, stated Mr. Agarwal, “This (the semiconductor chipsets and display glass) is the fundamental raw material which we have cracked.”