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India's Plans for Chip Production Dashed by an ISMC Semiconductor Factory

CIO Insider Team | Thursday, 1 June, 2023

According to reports, India's plans for chip production were dashed by a $3 billion semiconductor factory being built by the chip consortium ISMC, which included Israeli chipmaker Tower as a tech partner.

The second, $19.5 billion project is moving slowly as well since Vedanta, an Indian company, and Foxconn, a Taiwanese company, are unable to reach an agreement on a partner, European chipmaker STMicroelectronics.

Prime Minister Narendra Modi, who has made chips a high priority in his effort to usher in a new era in electronics manufacturing by wooing international corporations, has suffered a significant setback as a result of the difficulties the companies have encountered.

Three applications to establish facilities under a $10 billion incentive program were received last year from India, which anticipates that its semiconductor market will be worth $63 billion by 2026.

According to the reports, they came from the Vedanta-Foxconn Joint Venture, the international ISMC consortium, which counts Tower Semiconductor as a technology partner, and the Singapore-based IGSS Ventures.

Depending on how its negotiations with Intel turn out, Tower may decide to rethink its involvement in the project.

Gujarat, the home state of Modi, will host the Vedanta JV plant, while ISMC and IGSS have pledged $3 billion for plants in two different southern states.

According to reports, ISMC's $3 billion plans for a chip manufacturing facility are presently on hold since Tower was unable to move forward with binding contracts while things were still being reviewed following its $5.4 billion acquisition by Intel last year. The transaction is subject to regulatory approval.

India is a late entry, and a few countries like Taiwan produce the majority of the world's chips. In September, the Vedanta-Foxconn JV revealed its plans to produce chips in Gujarat amid much excitement. The $19.5 billion initiative, according to Modi, is "an important step" toward achieving India's chip-making goals.

But as the JV looks for a tech partner, things haven't gone perfectly. STMicroelectronics had joined Vedanta-Foxconn for the purpose of licensing technology, but the Indian government has stated that it wants STMicro to have "more skin in the game"—perhaps a stake in the collaboration.

Depending on how its negotiations with Intel turn out, Tower may decide to rethink its involvement in the project.

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