India Semicon: Foxconn, STMicroelectronics planning to build semiconductor plant in India

Foxconn Technology Group is joining forces with STMicroelectronics NV in a collaborative effort to establish a semiconductor factory in India, as they seek government support to enhance their presence in the South Asian nation.

The companies, Taiwan’s Foxconn and Franco-Italian STMicro, are in the process of seeking state assistance for the construction of a 40-nanometer chip plant. People familiar with the matter, who preferred to remain anonymous since the plan has not been made public, have confirmed this development. It’s worth noting that these 40-nanometer chips are employed in a wide range of applications, including automobiles, cameras, printers, and various other types of machinery.

This strategic move follows Foxconn’s previous endeavour to partner with billionaire Anil Agarwal’s Vedanta Resources Ltd., which ultimately did not materialize despite a year of effort and limited progress. By collaborating with STMicro, Foxconn, a contract manufacturing giant, is leveraging the expertise of a chip industry pioneer to expand its presence in the lucrative yet challenging semiconductor sector.

The setback experienced by Foxconn in its prior attempt with metals company Vedanta underscores the formidable challenges involved in establishing new semiconductor facilities. These facilities are massive in scale, requiring investments amounting to billions of dollars and demanding highly specialized knowledge to operate effectively.

Neither Foxconn nor Vedanta possessed significant prior experience in chip manufacturing, and their joint venture was hindered by delays in securing a partner with production-ready chip technology and obtaining approvals for government subsidies.

Foxconn is engaged in discussions with several other companies possessing chip-making capabilities, as revealed by one of the sources.

India, like several other nations, including the United States, is actively working to bolster its semiconductor production to reduce dependence on costly imports and minimize reliance on Taiwan and China. Prime Minister Narendra Modi has committed $10 billion to attract chip manufacturers, with his administration agreeing to cover half of the expenses associated with establishing semiconductor facilities.

This initiative has prompted US memory chip company Micron Technology Inc. to announce a $2.75 billion investment in an assembly and testing facility in Gujarat.

Other companies involved in chip-related activities are also making their way into India. This includes Advanced Micro Devices Inc. and equipment manufacturer Applied Materials Inc., both of which intend to allocate $400 million each toward research and development, as well as engineering centers, in the thriving technology hub of Bengaluru in southern India.