Vedanta-Foxconn chip factory set to get green light

“Their plan is for fabrication of 40 nm (nanometre) chips–there are some conditions they need to fulfil. We are going to approve it,” one of the officials told ET.

Another top official said, “The approvals will come in very shortly.”

Vedanta Foxconn Semiconductors Ltd (VFSL) has signed initial pacts with two companies for technology transfer–US-headquartered GlobalFoundries and European chip-maker STMicroelectronics (STMicro). The details of the two have been submitted to the information technology (IT) ministry, one of the officials said. The government has asked VFSL to submit details of the “binding technology transfer agreement” with either of the two companies, the person added.

The IT ministry, nodal ministry for the ISM, has suggested to GlobalFoundries and STMicro that they take a stake in VFSL as well, a third official said.

“They have responded positively to the suggestion. We are waiting for them to get back to us on the proposal,” the person said.

GlobalFoundires told ET it could not “confirm any of this information” and had “no further comment.”

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STMicro and Foxconnn did not respond to queries.

VFSL has an agreement with “a technology partner to transfer and qualify a proven, production-grade, high volume, technology with licenses for Integrated Circuit manufacturing in India,” CEO David Reed told ET. “However, we also have in place an NDA (non-disclosure agreement) because of which we are unable to disclose further details.”

VFSL is a 63-37 joint venture between India’s Vedanta Group and Taiwan’s Hon Hai Precision Industry (Foxconn). It has plans to invest up to Rs 66,000 crore initially to set up a semiconductor manufacturing unit at Dholera in Gujarat. Overall, the joint venture has plans to invest a total Rs 1.54 lakh crore in the Dholera plant, which will also include a unit for display fabrication.

The government plans to give close to 50% subsidy to selected applicants under the ISM initiative in a bid to kickstart chip manufacturing in the country. The ISM programme was announced in December 2021.

“Before disbursal of incentives, there is a list of conditions they (VFSL) must fulfil,” said one of the officials cited above. These include details of the binding technology transfer agreement and the technology being used besides information on intellectual property rights holders, the person added. It will also have to furnish data on the technology transfer duration as well as the technical experts who will be involved, the official said.

“We will see these details and set preconditions for any money that is given to them,” the official said.

ET reported last year that the IT ministry had asked the Vedanta-Foxconn JV to bring on board a third technology partner as the ministry was unsure that the existing partners had the technical know-how for semiconductor manufacturing and fabrication.

Akarsh Hebbar, the managing director of Vedanta’s global display and semiconductor business, had told ET earlier that the joint venture had provided details on the technology partner to the IT ministry.

Of the two venture partners, Foxconn has taken the lead on finalising the technology partner, Reed previously told ET. The joint venture had full access to a “world-class manufacturable, high-volume, automotive-grade technology,” he had said.

In addition to the Foxconn-Vedanta proposal, the Centre has also received bids to set up semiconductor fabrication units from Next Orbit Ventures, which has partnered with Israel’s Tower Semiconductor as well as Singapore-based IGSS Ventures. Tower is being acquired by Intel–the deal awaits regulatory approval.