Setback for Vedanta-Foxconn as hurdles arise in chip manufacturing
2 min read . Updated: 13 Apr 2023, 09:15 AM IST
Premium- The Vedanta-Foxconn consortium is among the five applicants vying for government incentives under a $10-billion package unveiled in December 2021 to foster domestic semiconductor manufacturing in India.
The talks between the Vedanta-Foxconn semiconductor consortium and STMicroelectronics for the latter's potential entry as a technology partner have encountered obstacles due to disagreements on various aspects, The Economic Times reported citing sources.
These include the specifics of technology transfer, the duration of the partnership, and the allocation of investment funds from each company.
A crucial point of contention is that STMicroelectronics is seeking to restrict the extent of technology transfer and incorporate a sunset clause to determine the duration of the joint venture, as disclosed by an individual familiar with the situation.
“STMicroelectronics also has some reservations regarding its investment in the (Vedanta-Foxconn) combine. They want Vedanta to take the lead and invest more," this person said.
Another source said that STMicroelectronics wants to exit the joint venture after “5-10 years during which it can complete technology transfer," the Vedanta-Foxconn combine wants the European chipmaker to stay on for longer.
The inclusion of STMicroelectronics as a technology partner is crucial for the Vedanta-Foxconn consortium to be eligible for the Indian central government's ₹76,000 crore incentive plan.
As per the official requirements for the semiconductor incentive plan, applicants must showcase their expertise in the specialized domain of semiconductor manufacturing. To gain government approval, applicants must either possess a fabrication unit capable of producing semiconductor chips in the 65-28 nanometer (nm) range, or have "production-grade licensed technologies" to manufacture 28 nm chips. Additionally, they must also provide evidence of their capabilities in advanced node technologies through licensing or development, as outlined in the official guidelines.
Vedanta, in collaboration with Foxconn, the contract manufacturer for iPhones, has revealed its intention to establish a semiconductor manufacturing facility in Gujarat, India. The company has announced plans to invest up to ₹66,000 crore in this chip manufacturing plant, with an initial focus on producing chips in the 28 nm and lower ranges.
The Vedanta-Foxconn consortium is among the five applicants vying for government incentives under a $10-billion package unveiled in December 2021 to foster domestic semiconductor manufacturing in India.
The government has pledged to cover 50% of the project cost, along with additional incentives, as part of its support for the initiative.