Foxconn Technology Group is joining hands with STMicroelectronics NV to seek state support for the establishment of a semiconductor factory in India, aiming to expand its presence in the South Asian nation.
Foxconn Technology Group is joining hands with STMicroelectronics NV to seek state support for the establishment of a semiconductor factory in India, aiming to expand its presence in the South Asian nation. The collaboration involves an application for assistance in building a 40-nanometer chip plant, a significant development as such mature chips find applications in various critical devices, including cars, cameras, printers, and a wide range of other machinery.
This strategic move comes on the heels of Foxconn’s previous attempt to partner with Vedanta Resources Ltd, an effort that ultimately dissolved after a year of limited progress. By teaming up with STMicro, a pioneer in the chip industry, Foxconn is tapping into valuable expertise to venture further into the lucrative yet challenging semiconductor sector.
The difficulties encountered in establishing semiconductor plants are considerable. These massive complexes require billions of dollars for construction and specialized expertise to operate efficiently. Neither Foxconn nor Vedanta had substantial prior experience in chip manufacturing. Their joint venture was hindered by delays in securing a partner with production-ready chip technology and obtaining approvals for state subsidies.
The Indian government has expressed interest in Foxconn’s partnership with STMicro and has requested additional information regarding the collaboration. India, like other nations, is striving to bolster its domestic chip production to reduce dependence on costly imports and countries like Taiwan and China, which currently dominate the semiconductor market.
Prime Minister Narendra Modi has committed USD 10 billion to attract chip manufacturers, pledging that the government will shoulder half the setup costs for semiconductor facilities. This initiative has already attracted interest from companies like Micron Technology Inc, which plans to establish a USD 2.75 billion assembly and testing facility in Gujarat, Modi’s home state.
For projects like Foxconn’s semiconductor endeavour, transparency is crucial. Applicants must disclose detailed information, including firm agreements with technology partners, financing plans involving equity and debt arrangements, and the types of semiconductors they intend to produce and the target customer base.
Other chip-related firms, such as Advanced Micro Devices Inc. and Applied Materials Inc., are also making substantial investments in India. They plan to allocate USD 400 million each toward research and development and engineering centres in Bengaluru, a burgeoning tech hub in southern India. This collective effort signifies India’s determination to become a prominent player in the semiconductor industry, reducing its reliance on external sources and strengthening its technology sector.
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