Vedanta and Foxconn said they will invest over ₹1.54 lakh crore to set up a display fabrication and semiconductor manufacturing facility in Gujarat. The proposed facility will come up over the next two years in Prime Minister Narendra Modi’s home state, according to the terms of the deal signed on Tuesday.
The mining giant will hold 60% stake in the joint venture while the Taiwanese chip maker will own the balance 40%. The JV became the fourth to announce plans under the ₹76,000-crore production-linked incentive (PLI) scheme to foster chip-making capabilities in the country.
In a series of tweets announcing the deal, Vedanta chairman Anil Agarwal said the investment “will help make India’s #Atmanirbhar Silicon Valley a reality.”
ET had on Monday reported that the Vedanta-Foxconn JV would pick Gujarat as the location for its semiconductor and display fabrication units.
Terming Tuesday’s announcement of the MoU as “an important step (in) accelerating India’s semiconductor manufacturing ambitions,” PM Modi said in a Twitter post that ” the investment of ₹1.54 lakh crore will create a significant impact to boost the economy and jobs. This will also create a huge ecosystem for ancillary industries and help our MSMEs.”
Bid to diversify supply chains beyond China
India’s bid to seed a vibrant semiconductor ecosystem is gaining momentum amid the growing move by global electronics majors to diversify supply chains beyond China, where stringent anti-Covid policies remain in force. While the supply shortage that gripped nations in mid-2020 has begun to ease, emerging economies including India are aggressively incentivising domestic manufacturing of semiconductor chips, including those used in smartphones and other electronic devices.
The Vedanta-Foxconn unit will operate on 28 nanometres (nm) technology nodes, while the display fabrication manufacturing unit will produce Generation 8 displays, which cater to small and medium as well as large applications, the companies said. Of the ₹1.54 lakh crore proposed investment, ₹94,500 crore will be used to set up a display fabrication manufacturing unit, while another ₹60,000 crore will go towards a semiconductor fabrication and outsourced semiconductor assembly and test unit in the planned Gujarat plant.
Vedanta is the fourth – and last – applicant to decide its investment destination under the central government’s aggressive incentive-backed proposal. In addition to the Vedanta-Foxconn unit in Gujarat, Karnataka and Tamil Nadu will also house semiconductor fab and display units due to be set up by ISMC Analog and IGSS Ventures in the two states, respectively.
Bengaluru-based Rajesh Exports has also announced plans to invest $3 billion to set up a fab display unit in Telangana.
The semiconductor manufacturing scheme, announced by the Centre in December 2021, has triggered intense competition among rival states. The Vedanta-Foxconn venture had earlier evaluated an electronics cluster off Pune in Maharashtra, but the western state’s reservations on some of the incentives demanded by Vedanta tilted the deal in the favour of Gujarat, said people aware of Vedanta’s negotiations. Speaking at the MoU-signing in Gujarat, Union minister for electronics and information technology Ashwini Vaishnaw said the unit would generate direct employment for one lakh people.
“A semiconductor ecosystem is very complex. There are many chemicals and gases, and several design elements in the manufacturing process. A new ecosystem for electronics manufacturing develops around such units which in turn creates more jobs,” he said.
Foxconn said in a statement on Tuesday that the Centre’s “active and strong support” boosts confidence in setting up a semiconductor factory, adding that the improving infrastructure in the country adds to the positive sentiment.
Earlier, ISMC Analog, the consortium comprising Israeli technology company Tower and the Gulf-based NextOrbit Ventures, had chosen to move its $3 billion plant from Gujarat’s Dholera Investment region to Mysuru in Karnataka.
Global pushRecently, the US passed a law that would incentivise advanced-node semiconductor manufacturing in the country, and prohibit such investments in China by American global multinationals like Intel. With Taiwan-China tensions growing in recent times, the global semiconductor supply chain could suffer geopolitical shocks too, prompting countries like India to accelerate plans to localise the supply chain, experts said.
Speaking to ET, a senior executive at one of the applicant companies said, “it’s obvious that the states fought a tough war to bag these investments. One only has to look at Taiwan to know what semiconductors can do to a nation”.
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