The planned $3 billion semiconductor facility in India, led by the chip consortium ISMC and involving Israeli chipmaker Tower, has encountered a setback due to Intel's ongoing acquisition of Tower, according to three sources familiar with the matter, as reported by Reuters. This development has dashed India's ambitions in chip manufacturing. Furthermore, a joint venture between India's Vedanta and Taiwan's Foxconn, which had a $19.5 billion plan to build chips locally, is also facing delays as talks with European chipmaker STMicroelectronics to join as a partner has reached an impasse, as per a fourth source with direct knowledge.
These challenges pose a significant setback to Prime Minister Narendra Modi's aspirations, as he has prioritised chip manufacturing in an effort to attract global companies and propel India into a new era of electronics manufacturing. India anticipates its semiconductor market to be valued at $63 billion by 2026. Last year, three applications were submitted under a $10 billion incentive scheme to establish semiconductor plants, including those from the Vedanta-Foxconn joint venture, ISMC consortium, and Singapore-based IGSS Ventures.
According to the sources, ISMC's plans for the $3 billion chipmaking facility are currently on hold as Tower has been unable to finalise binding agreements due to Intel's acquisition last year. The deal is pending regulatory approvals. Rajeev Chandrasekhar, the deputy IT minister, stated in an interview that ISMC "could not proceed" due to Intel's acquisition of Tower, and IGSS Ventures "wanted to re-submit" their application for incentives. Tower is expected to reassess its participation in the venture based on the progress of its deal talks with Intel.
Meanwhile, the Vedanta-Foxconn joint venture has faced difficulties in securing a technology partner. The government has expressed its desire for STMicroelectronics to have a stake in the partnership. Still, STMicro is not inclined towards this arrangement, as they believe the market needs to mature further. Talks between the parties remain unresolved. The Vedanta-Foxconn CEO, David Reed, confirmed their agreement with a technology partner for technology transfer but declined to provide further details.
To revive investor interest, the IT ministry recently announced that the country will reopen applications for chipmaking incentives. The application window will extend until December next year, providing more time for companies to apply compared to the initial 45-day period. Minister Chandrasekhar expressed optimism that current applicants would reapply, and new investors would also show interest in the program.