India’s semiconductor ambition stalled as Chip Fabrication unit plans face setbacks

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India’s longstanding pursuit of establishing itself as a significant semiconductor manufacturing hub, a goal set as far back as the 1970s, has encountered yet another stumbling block. Despite concerted efforts by the Indian government, the dream of fostering a domestic chipmaking industry remains elusive, with the recent collapse of the ambitious $19.5 billion Foxconn-Vedanta joint venture being the latest setback.

Approximately two years ago, the Indian government unveiled the “India Semiconductor Mission,” an initiative accompanied by a substantial $10 billion incentive aimed at luring semiconductor manufacturers to set up operations within the country. In addition to the Foxconn-Vedanta collaboration, other entities such as IGSS Ventures and ISMC displayed interest in this endeavour.
Vedanta and Foxconn were planning to set up a fab unit for 28 nanometer chips in Dholera in the state of Gujarat. Media reports, however, suggest that the companies are unable to close the deal due to disagreements over technology transfer, the duration of the partnership and the funds to be invested by each partner. The Taiwan-based electronics manufacturing giant Foxconn later decided to withdraw from a joint venture.
The Indian government has now issued a fresh call for applications. With the application window now open till December 2024, both existing and new applicants have the opportunity to reapply. Nevertheless, this extension further postpones the establishment of a chip fabrication unit in the nation.
Speculation now mounts that Tata Group could emerge as a surprising contender as the group companies had plans to enter chip manufacturing business. While the group did not initially apply for the government initiative, its vocal ambitions in the semiconductor sector cannot be dismissed.

In short, India’s aim to become a global hub for electronics manufacturing and design continues to navigate complex terrain.