Chip Manufacturing In India: Intel-Tower Deal Stalls ISMC's $3 Billion Semiconductor Facility Plan

The $3 billion semiconductor facility in India by ISMC with Israeli chipmaker Tower as a tech partner has been stalled due to Intel's ongoing takeover of the later, hampering India's chip making plans.

In addition to that, Vedanta and Foxconn's $19.5bn chip manufacturing plan in India, reports Mint, is also facing slow progress, with talks to partner with European chipmaker STMicroelectronics deadlocked.

The central government had received three proposals last year for setting up fab in the country under a $10 billion incentive scheme:

• Vedanta-Foxconn joint venture

• International consortium ISMC

• Singapore-based IGSS Ventures

The Vedanta joint venture plant will be constructed in Gujarat, whereas ISMC and IGSS committed $3 billion each for the construction of plants in two southern states.

However, ISMC's plan of investing $3 billion in a chipmaking facility is on hold, according to three sources, said the report.

Tower, the partner company, is unable to sign binding agreements while the plans are being reviewed after Intel's $5.4 billion acquisition last year. The deal is pending regulatory approvals.

Rajeev Chandrasekhar, Minister of State for Electronics and IT, stated that ISMC could not proceed due to Intel's acquisition of Tower, and IGSS wanted to re-submit their application for incentives, resulting in both of them dropping out.

Tower may reconsider their participation in the project depending on the outcome of their negotiations with Intel, according to the report.

In September, the Vedanta-Foxconn JV had unveiled its $19.5 billion chipmaking plans in Gujarat.

Currently, they are unable to find a partner to licence them the technology for manufacturing 28-nanometre chips.

As per the Mint report, Vedanta-Foxconn had got on board STMicroelectronics for licensing tecnology, but Centre had conveyed it wants STMicro to have "more skin in the game" - like a stake in the partnership.

STMicro is hesitant about the proposal. "From STM's perspective, that proposal doesn't make sense because they want India market to first be more mature," a source said, quoted the report.

MoS Chandrasekhar told Reuters on 19 May that the Vedanta-Foxconn joint venture is facing challenges in finding a technology partner.

Vedanta-Foxconn JV CEO, David Reed, said in a statement that they have an agreement with a technology partner to transfer technology with licenses. However, no further details were mentioned.

The Centre has also reopened the window for applying to its Rs 76,000 crore semiconductor manufacturing plan.

The government offered the first window for scheme applications in January 2022, and closed it in 45 days. The second window will open today (1 June) and remain available until December 2024.