India: Vedanta Group and Foxcomm split. Who will be the next king of Indian microchips?
When the Indian government announced an incentive program to develop a semiconductor ecosystem in the country in December 2021, the only Indian company that pledged to seize the opportunity was Anil Agarwal's Vedanta Group . With no previous experience manufacturing electronics, much less semiconductors, the energy-metals conglomerate has set up a joint venture with Taiwanese group Hon Hai Technology (Foxconn) to use government grants.
Together with a partner who would bring the technology and know-how needed for chip production – which only a few companies in the world possess – the two were expected to create one of the first semiconductor manufacturing plants in the country. With a 67% stake in the joint venture (JV), Vedanta was responsible for building the factory, while Foxconn was responsible for the technology component, David Reed, CEO of the Vedanta-Foxconn Semiconductors joint venture, told BT earlier.
Now, more than a year after unveiling their plans, the two sides have parted ways , with Foxconn announcing it has decided not to move forward with the joint venture that was expected to be worth $19.5 billion. Industry insiders attribute the reason to Vedanta's possible financial problems and delay in obtaining government approvals. However, this has not stopped the two operators who, separately, are looking for partners to become the new lords of the chip sector in India, a giant with 1.3 billion inhabitants.
Following the announcement of its departure from Foxcomm, Vedanta said, "We will continue to grow our semiconductor team and are licensed for 40 nanometer (nm) manufacturing technology from a major integrated device manufacturer (IDM)." In June, the joint venture resubmitted the incentive application based on this licence. In addition, Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, told BT that the request was under consideration, but the question remains as to who could be the industrial partner.
The company had also said it was working to acquire a license for the 28nm production node, a much more advanced chip than the 40nm. Whether it's 28nm or 40nm, whoever becomes the technology partner will need to accompany Vedanta on its semiconductor journey, as technology transfer for chip manufacturing, along with yield optimization and scaling once production is underway, involves many stages. It is a non-trivial technology that requires imported know-how to grow productivity by up to 100%.
But the challenge does not end with the search for a technological partner. After the production of the wafers, Vedanta will have to find customers for its chips. “Their main problem will be who will be the customer for their wafers,” says Satya Gupta, president of the VLSI Society. It's a problem that Foxconn, as the maker of leading brands such as Apple, Dell and Xiaomi, among others, could easily have addressed, while Vedanta will have to start practically from scratch.
Foxconn hasn't abandoned its plans to set up semiconductor factories in India. On the contrary, reports suggest that Foxconn now intends to set up at least four or five semiconductor production lines in the country and has already signed memorandums of understanding with two technology partners. Additionally, the firm is in talks with Indian and global companies for a potential partnership.
If industry sources are to be believed, one of the Indian companies Foxconn may be in talks with could be the Tata group, which has already announced plans to venture into semiconductor manufacturing soon. Incidentally, the salt and software conglomerate is also in talks to buy the iPhone assembly plant of Taiwan-based contract electronics manufacturer Wistron in Karnataka, putting it in competition with Foxconn, which makes iPhones. also in India.
In the coming years, the two companies are likely to compete with each other in everything from smartphones to automotive manufacturing, but in the future, they could join forces to succeed in India's chip manufacturing ecosystem. Last year, the Tata Technologies group joined the Mobility in Harmony consortium, led by Foxconn, to advance the development of sustainable mobility solutions and encourage collaboration within the industry.
While it is not yet clear whether Vedanta and Foxconn will be able to carry out their plans separately, if they can find credible technology partners it will prove to be a boost for India's semiconductor mission.
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The article India: Vedanta Group and Foxcomm split. Who will be the next king of Indian microchips? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/india-vedanta-group-e-foxcomm-si-dividono-chi-sara-il-prossimo-re-dei-microchip-indiani/ on Sat, 29 Jul 2023 15:36:53 +0000.