Semiconductor and Display Fabrication Update 2022

Joint venture Vedanta-Foxconn was instructed to provide information on-chip knowledge.

Overview

Companies seeking incentives under India's ambitious Rs 76,000 crore proposals to create a complete semiconductor ecosystem should show clear ability in the specialized sector of semiconductor fabrication.

As per different entities with knowledge of the government's thinking, the Vedanta-Foxconn joint venture lacks the "necessary technological know-how" for semiconductor production and fabrication, and the Centre is "unsure" about this.

According to anonymous sources, Vedanta NSE -4.22 percent and Foxconn Technology Group need to be more particular about how they intend to acquire the necessary ability or find a third partner with proven technical ability.

"We don't know precisely how Vedanta-Foxconn intends to reach the level that the govt needs. A senior government official stated, "We want the corporations to clarify on this. Foxconn has not truly been engaged in massive semiconductor chip production ".

Companies?require?to?show?transparent?moxie?in the specialized?ground?of semiconductor manufacturing to?qualify?for?impulses?under India's?aspiring?Rs76,000 crore?scheme?leveled?at creating an?intact?semiconductor ecosystem, the?roots?directed?out.

?"The government does not focus on a single business. It is a significant strategy that will affect the entire world. No plan can fall through or perform below expectations at the very last minute "Added a different official.

?Companies must either own a fabrication facility for semiconductor chips in the 65-28 nanometer range or have "manufacturing licensed technologies" to produce 28 nm chips in order to obtain government authorization to set up semiconductor manufacturing in India. According to an official statement, they must also give visibility into advanced node technology through licensing or development.

?The government announced earlier in February that it had received investment options for semiconductor and display fabrication plants totaling Rs 1.53 lakh crore from various corporations.

The incentives, which might total up to Rs 76,000 crore, could cover half of the total investment made by the fab applicants.

In just the same month, the mining conglomerate Vedanta and Hon Hai Technology Group ("Foxconn") signed an agreement to establish a joint venture (JV) for the purpose of developing the semiconductor and display manufacturing ecosystem in India. The sole candidate who is still looking for a factory location is Vedanta-Foxconn as of this writing.

Other candidates, such as the joint venture between Israeli technological giant Tower and Dubai's Next Orbit called ISMC Analog, have chosen Mysuru as their place of manufacture. Tamil Nadu is where Singapore's IGSS Ventures is anticipated to choose.

?Technology collaboration

Industry insiders who are aware of the IT ministry's discussions claimed that while Foxconn excels at making electronics systems, moving into the semiconductor industry would require a "backward integration" that would require a technical partner.

An executive who wished to remain anonymous stated, "One cannot predict when the technology partner would be onboarded, but I would say that is the manner they will go about it, with Vedanta-Foxconn being the investment partner and executed through a tech partner."

According to the Memorandum of Understanding (MoU) that the two businesses signed, Vedanta would own the bulk of the equity investment in the JV while Foxconn will hold a minority stake. Anil Agarwal, chairman of Vedanta, will preside over the joint venture business.

Vedanta intends to invest up to Rs 66,000 crore in the semiconductor chip production facility. At the time, the company had stated that it will use a 28-nanometer (nm) manufacturing to target electronics and cellphones. (Source: ET)

Ideal Partner

Foxconn is the ideal partner because of its global reach in electronics manufacturing, according to Akarsh Hebbar, global managing director of Vedanta Group's display and semiconductor business.

Hebbar reiterated his position on the JV in April and asserted that Foxconn will be able to gather the necessary technologies and resources.

"This is how it (Taiwan's industry) operates: Every time they introduce new technology, the industry works together to make the technology available. In order to bring this technology and make it operational, they already have MoUs with these technology providers.

Foxconn had also stated that semiconductor fabrication and manufacturing was a critical growth area for the company in its 2021 annual report. It has already invested in fabrication facilities in Taiwan and Malaysia.