Vedanta-Foxconn to invest Rs 1.54 L cr in India's first chip unit

AHMEDABAD/NEW DELHI: Mining conglomerate Vedanta and Taiwanese electronics manufacturing giant Foxconn will make one of the largest ever investments of Rs 1.54 lakh crore in setting up India's first semiconductor plant in Gujarat.

The 60:40 joint venture of Vedanta-Foxconn will set up a semiconductor fab unit, a display fab unit, and a semiconductor assembling and testing unit on a 1000-acre land in the Ahmedabad district.

"The plant will start production in two years," Vedanta chairman Anil Agarwal said after signing the Memorandum of Understanding (MoU) with the Gujarat government on Tuesday.

Semiconductor chips, or microchips, are essential pieces of many digital consumer products - from cars to mobile phones and ATM cards. The Indian semiconductor market was valued at $27.2 billion in 2021 and is expected to grow at a healthy CAGR of nearly 19 per cent to reach $64 billion in 2026. But none of these chips is manufactured in India so far. A massive shortage in the semiconductor supply chain last year affected many industries, including electronics and automotive.

To cut dependence on imports from nations like Taiwan and China, the government brought a fiscal incentive scheme for manufacturing semiconductors in the country. Vedanta-Foxconn is one of the successful applicants for the Production Linked Incentive (PLI) scheme for semiconductors. "This is the largest ever investment in Gujarat... ours will be the first semiconductor plant in the country," Agarwal said, adding local manufacturing of chips will make laptops and tablets affordable.

Agarwal said the Gujarat unit will manufacture 40,000 wafers (that's used in fabricating integrated circuits) and 60,000 panels per month to begin with. Prime Minister Narendra Modi hailed the MoU as one that will boost the economy and create jobs.

"This MoU is an important step in accelerating India's semi-conductor manufacturing ambitions. The investment of Rs 1.54 lakh crore will create a significant impact to boost the economy and jobs. This will also create a huge ecosystem for ancillary industries and help our MSMEs," he tweeted. Besides Vedanta, a consortium comprising Dubai-based NextOrbit and Israeli tech firm Tower Semiconductor has signed a deal with the Karnataka government for a plant in Mysuru while Singapore-based IGSS Venture has chosen Tamil Nadu as the location for its unit.

Gujarat Science and Technology Department Secretary Vijay Nehra, who signed the MoU on behalf of the state government, said of the total investment, Rs 94,000 crore will go into setting up the display manufacturing unit while Rs 60,000 cr will be invested in the semiconductor manufacturing facility.