Finally, India is getting its first semiconductor facility. Vedanta and Foxconn, a Taiwanese electronics manufacturing firm, would spend 1.54 lakh crore. Foxconn is the technical partner, while Vedanta, an oil-to-metals giant, is funding the project. The country’s first chip factory will be built on a 1000-acre plot of land in Ahmedabad, Gujarat.
Geopolitical concerns with China, as well as a global shortage of semiconductors, have driven Countries such as the United States are increasing domestic manufacturing capacity in order to lessen their reliance on imports to restore global dominance. The United States has supposedly laid aside vast quantities of money and is seeking alliances with other countries.
Vedanta following the agreement of a 60:40 joint venture with Foxconn will own 60% of the shares in the joint venture, while Foxconn will own 40%. In the following two years, the joint venture plans to establish a semiconductor manufacturing unit. Vedanta and Foxconn will construct three units: a semiconductor fabrication unit, a display fabrication unit, and a semiconductor assembling and testing unit.
This new facility will signal the start of semiconductor manufacture in India. This is also vital for India since it reduces our reliance on other countries. The planned semiconductor manufacturing fab unit would use 28nm technology nodes and 300mm wafers, while the display manufacturing unit will create Generation 8 displays for small, medium, and large applications.
The Vedanta group would invest Rs 1.54 lakh crore to establish two plants in Gujarat. Vedanta Displays Limited would invest Rs 94,500 crore in a Display Fab Unit, while Vedanta Semiconductors Limited will invest Rs 60,000 crore in an integrated Semiconductor Fab Unit and an OSAT (outsourced semiconductor assembly and test) facility.
The proposed investment by the Vedanta and Foxconn Group in the establishment of India’s first display manufacturing fab unit and an Integrated Semiconductor fab unit with an OSAT facility would aid in the development of upstream and downstream electronics manufacturing clusters, as well as trade links. The Vedanta and Foxconn Groups will collaborate closely with the state government to develop high-tech clusters with the necessary infrastructure, including land semiconductor grade water, high-quality power, logistics, and a skill ecosystem.
Semiconductor Industry Growth
Semiconductor chips, sometimes known as microchips, are crucial components of many digital consumer items, which are used in automobiles, mobile phones, and other electronic gadgets, and are not currently made in India. Currently, Taiwan manufactures 8% of all chips used in the globe, followed by China and Japan.
In 2021, the Indian semiconductor industry was valued at $27.2 billion, and it is predicted to rise at a high CAGR of about 19% to $64 billion by 2026. However, none of these chips are currently made in India.
India now boasts 70,000 startups, including 100 unicorns, and the country has surpassed China to become the world’s second-largest mobile phone manufacturer. Indian industries produce electronics worth Rs USD 80 billion, or about Rs 6,00,000 crore.
Last year, a significant shortfall in the semiconductor supply chain impacted a wide range of sectors, including electronics and automobiles.
Other Steps taken
Aside from Vedanta, a consortium led by Dubai-based NextOrbit and Israeli technology firm Tower Semiconductor has agreed to establish a facility in Mysuru, while Singapore-based IGSS Venture has picked Tamil Nadu as the location for its unit.
This is the largest business investment in independent India’s history. This Memorandum of Understanding is a crucial step in accelerating India’s chip manufacturing ambitions. The government has announced four programs totaling Rs 76,000 crore in order to position India as a worldwide semiconductor chip manufacturing powerhouse.
The Rs 1.54 lakh crore investment will have a huge influence on the economy and employment creation. This would also benefit our MSMEs by creating a large ecosystem for ancillary businesses. The two planned projects would provide around 1 lakh new job opportunities in the state.