India expands scope of semiconductor ambitions, Vedanta seeks lifeline

01 Jun 2023 CW Team

The central government of India has opened the doors for new and existing applicants to submit proposals for semiconductor fabrication plants. Union Minister for Information Technology, Rajeev Chandrashekhar, tweeted that there are expectations of both reapplications from current applicants and new investors showing interest in the semiconductor sector. However, the joint venture between Vedanta Resources Ltd., led by Agarwal, and Taiwan's Hon Hai Precision Industry Co. is likely to be informed that it won't receive incentives for producing 28-nanometer chips. The venture had applied for substantial financial support worth billions of dollars but failed to meet the government's criteria.

While Vedanta and Hon Hai have the option to reapply, a rejection would result in delays for Agarwal's vision of establishing India's first major chipmaking operation. This setback comes at a challenging time for Vedanta, as the conglomerate is already grappling with significant debt burdens.

Chandrashekhar stated that the initial application window for more expensive 28nm fabs was open for only 45 days in January 2022, attracting three applications. These applications were evaluated by the India Semiconductor Mission (ISM) and its advisory group. The current strategy also aims to encourage investments in mature nodes beyond 40nm, allowing current and new players to apply afresh based on their technology capabilities.

In the near future, the government may request Vedanta to submit a new application for financial support to manufacture 40nm chips along with a revised capital expenditure estimate. This bid can be considered once the application process for incentives is reopened by the government, as part of its efforts to attract chipmakers to the country. Vedanta has been in talks with STMicroelectronics NV for licensing chip fabrication technology, although no official partnership announcement has been made yet.

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