Progress on two major semiconductor projects in India has been slow, according to a recent Reuters news report.
The first project, a $3 billion semiconductor facility planned by the International Semiconductor Manufacturing Consortium (ISMC), has been put on hold due to the ongoing takeover of ISMC’s tech partner, Tower Semiconductor, by Intel. This setback has dashed India’s ambitions of becoming a prominent player in chip manufacturing.
The second project, a $19.5 billion investment initiative by Vedanta in partnership with Taiwan’s Foxconn, is also facing delays.
Talks between the companies and European chipmaker STMicroelectronics, aimed at securing their involvement as a partner, have reached a deadlock. These challenges represent a significant setback for Prime Minister Narendra Modi, who has prioritized chipmaking as a key element in his plan to attract global companies and revolutionize electronics manufacturing in India.
India anticipates its semiconductor market to be valued at $63 billion by 2026. Last year, the country received three applications under a $10 billion incentive scheme to establish chip manufacturing plants. The applicants included the Vedanta-Foxconn joint venture, the global consortium ISMC with Tower Semiconductor as its tech partner, and Singapore-based IGSS Ventures.
ISMC’s plans for a $3 billion chipmaking facility are on hold due to Tower Semiconductor’s inability to sign binding agreements, pending a review following Intel’s acquisition of the company for $5.4 billion last year. The completion of the deal is awaiting regulatory approvals.
Deputy IT Minister Rajeev Chandrasekhar informed Reuters in a May 19 interview that ISMC could not proceed due to Intel’s acquisition of Tower Semiconductor, and IGSS intends to resubmit its application for incentives. As a result, both companies had to withdraw their applications.
Tower Semiconductor will likely reassess its participation in the venture based on the progress of its deal talks with Intel.
The Vedanta-Foxconn joint venture sought to license technology from STMicroelectronics, but the Indian government expressed a desire for STMicroelectronics to have a stake in the partnership. However, STMicroelectronics is reluctant to proceed with such an arrangement, and the discussions remain in a state of uncertainty. From STMicroelectronics’ perspective, this proposal does not align with their goal of a more mature Indian market.
During the May 19 interview, Rajeev Chandrasekhar stated that the Vedanta-Foxconn joint venture is currently struggling to secure a technology partner. CEO of the Vedanta-Foxconn joint venture, David Reed, confirmed that they have an agreement with a technology partner for technology transfer and licensing but declined to provide further details.
India’s IT ministry announced that the country will reopen applications for chipmaking incentives, with a new deadline set for December of next year. Previously, the application window was only open for 45 days. Rajeev Chandrasekhar expressed optimism on Twitter, stating that it is expected that some of the existing applicants will reapply, and new investors will also submit their applications.
