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Home » India’s rising semi-conductor industry: Vedanta-Foxconn Investment in Gujarat

India’s rising semi-conductor industry: Vedanta-Foxconn Investment in Gujarat

vedanta foxconn semi-conductor industry

Imagining a life without an IoT (internet of things) device in today’s era is impossible. One cannot think of an electronic device that does not have the minuscule yet powerful component—the semiconductor chip, embedded in them.

In a recent report published by Deloitte, the global semiconductor chip industry is expected to reach about US$600 billion in 2022. Many devices worth tens of thousands of dollars cannot be sold if a single critical chip is missing, often costing less than a dollar.

This analysis shows that the chip shortage in the past two years has resulted in revenue misses of more than US$500 billion between semiconductor companies and their customers. In addition, to lost auto sales of more than US$210 billion.

For the first time ever, Deloitte predicts that the global industry will grow 10% in 2022 to more than US$600 billion. The semiconductor industry is set to expand across all industries, driven by the application it serves from cars to appliances to factories to defense, etc.

Read the full report here: 2022 semiconductor industry outlook

PLI (PRODUCTION LINKED INCENTIVE) SCHEME BY THE GOVERNMENT

The semiconductor industry typically has four main pillars

1.  Semi-conductor chips

2.  Discrete components

3. Substrate layers /packaging

4. Supply chain mechanism

Late in December 2021, the Government of India decided to invest roughly $ 10 billion to develop the semiconductor value chain. At the start of this value chain is a Silicon Semi-conductor fabricated to wafer, then the display fab at the user end (eg mobile phones display). Third is the compound semiconductor which is used in cars, railways, cameras, telecommunication towers, etc. and lastly it is the packaging.

There are various schemes that are drafted by the GOI for several small and large-scale businesses in this space. Design Linked Incentives[DLI] is one such powerful scheme offered by the GOI for design houses. Software tools, computing power, raw material chips, design validation/ testing, registration of Intellectual property, and actual fabrication costs are the major expenses incurred in the process to design a semiconductor by the semiconductor design companies. 50% of this cost will be borne by govt of India. 35000 high-quality direct employment and 100 thousand indirect employment will be created that will increase the strategic strength of India.

VEDANTA-FOXCONN INVESTMENT IN GUJARAT

Vedanta-Foxconn together agreed on MoU with the Gujarat government on 14th September 2022 for setting up a semi-conductor and display fabrication unit. The partnership will witness an investment of $19.5 billion in the state.

The state government in its statement announced that Vedanta would set up two units. Firstly, a chip-related production unit with an investment of 600 billion rupees ($7.58 billion) and secondly, a display manufacturing facility in which it will invest 945 billion rupees ($11.95 billion).

Vedanta Displays Limited will set up a Display Fab Unit in Gujarat. And, Vedanta Semiconductors Limited will set up an integrated Semiconductor Fab Unit and OSAT (Outsourced semiconductor assembly and test) facility in Gujarat.

The units will generate around 1 lakh new employment opportunities in the state according to Vedanta.

The mentioned twitter thread explains the above-mentioned points.

Read more here: Government of Gujarat signs an MoU of ₹ 1.54 lakh crore with Vedanta-Foxconn Group 

PM expresses optimism on the semi-conductor manufacturing; which will boast the job opportunities
Former MVA minister Aaditya Thackeray; on Maharashtra state not receiving the project. He questions the intent of the current government.

THE TATA TAKE

Tata Motors, now a leading electric car maker has recently partnered with Renesas Electronics, the Japanese chip manufacturer. The partnership will develop semiconductors that will be of great use as the electric vehicles are also perceived as smart vehicles. Moreover, Tata electronics chose the packaging business as every chip that is made needs to be packaged. One wafer can have hundreds or maybe even thousands or tens of thousands of dies. So, each wafer will create, on average, at least 5,000 to 10,000 packages. It’s an exponential volume as compared to wafer fab.

Read more here: Renesas Partners with Tata to Accelerate Progress

RECENT INVESTMENTS IN INDIA

Karnataka govt- Israeli firm ISMC Analog Fab Agreement

$3 billion investment by an Israeli firm, Tower Semiconductor and ISMC Digital.

The ISMC plant will manufacture 65nm analog semiconductors.

Tamil Nadu govt-Singapore based IGSS Ventures

$3.2 billion investment by Singapore firm IGSS Ventures.

It will be setting up a semiconductor high-tech park in the state.

What’s driving the growth globally?

Intel (INTC) [2020 Revenue: $77.87 billion], Samsung Electronics [2020 Revenue: $52.2 billion] and Taiwan Semiconductor Manufacturing Co. ( TSMC) [2020 Revenue: $45.5 billion] are the top 3 players powering the lives of billions of people worldwide. Of this TSMC, is a major supplier to Apple powering its various devices. Due to the rising geopolitical tension between China and Taiwan paired with the onset of covid-19, the semiconductor supply chain has had major setbacks, particularly in its supply chain.

The future of Taiwan still remains uncertain. India, therefore, needs to end its reliance on this space and needs to develop itself in electronics manufacturing and high-tech devices.

Conclusion

With Atmanirbhar Bharat Mantra, India intends to increase participation from private players and is also creating and nurturing start-ups to drive growth in this sector.   

Globally, during Covid-19, countries have faced an economic slowdown and disruptions in the supply chains. The waiting period for owning a car was anywhere between 6 months to a year. This is due to the shortage of semiconductor chips that is a necessity today in all automobiles. Not just-auto, the defense sector has dealt with the crisis. The industries, as well as the government, do realize the pressing priority. India is deemed as a newbie in this space and this step should have prioritized a decade ago. Still, a lot is in store for our developing economy and we need to act fast.

Also Read

Explained: Vedanta-Foxconn Semiconductor Plant Controversy

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