Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar tweeted on May 31 that India will start accepting and considering new applications for fabrication plants from new and existing applicants under the India Semiconductor Mission.

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The first window for more expensive 28-nanometer fabrication plants was kept open for 45 days only in January 2022 and received three applications from Vedanta-Foxconn JV; a global consortium ISMC which counts Tower Semiconductor as a tech partner; and from Singapore-based IGSS Ventures. The applications were then evaluated by India Semiconductor Mission and its Advisory group.

The government's strategy now is to encourage mature nodes of more than 40 nanometers, Chandrasekhar said. For this, the current and new players may apply afresh in various nodes where they have the technology. There is an expectation that some of the current applicants will reapply and new fresh investors shall also apply.

The government seeks to attract more big-ticket investments under a $10 billion incentive plan for chip and display production, aiming to make India a key player in the global supply chain. The government had earlier said that it will provide financial support for new semiconductor facilities to cover 50 percent of project costs and shall remove a ceiling for maximum permitted investment for display manufacturing.

Last year, Anil Aggarwal announced Vedanta's ambitious plans to build 28 nanometer chips in India in a partnership with Hon Hai, widely known as Foxconn. This will build India’s “own Silicon Valley”, Anil Aggarwal said.

According to reports, the project is yet to find a technology partner or license manufacturing-grade technology. At least one of those steps is needed for the venture to get government assistance.

As per Reuters, Vedanta-Foxconn JV CEO, David Reed, said in a statement that they have an agreement with a technology partner to transfer technology with licenses, but declined to comment further.

Also read: Vedanta-Foxconn semiconductor JV: What it means for chip manufacturing in India?

Vedanta and Hon Hai, the assembler of a bulk of the world’s iPhones, have no previous significant experience in chipmaking. Their difficulty in finding production-ready technology underscores challenges in setting up new semiconductor plants, massive complexes that cost billions to build and require very specialised expertise to run.

Vedanta was awaiting the outcome of its application from the government. Vedanta has previously said its partner Hon Hai had secured “production-grade, high-volume” 40-nanometer technology and “development-grade” technology for relatively more sophisticated 28-nanometer chips.

Chandrasekhar, in an interaction with CNBC-TV18 on May 31, said "There is no communication from the government that we are not pursuing Vednata's 28-nanometer fabrication proposal. If Vedanta has access to 40-nanometer technology, they can apply again under a new window."

The government is opening the application window again because the earlier window was just for 45 days, while now there is renewed interest. Chandrasekhar clarified that there is no rejection of any proposal at this stage.

"Quest for 28-nanometer can be pursued by Vedanta, nothing stops them from moving for 40-nanometer nodes."

Cabinet will shortly consider modification for semiconductor packaging. While Vedanta and Hon Hai can apply again for incentives to the government, a rejection would mean delays for Agarwal’s ambition to establish India’s first major chipmaking operation.

Also read: Vedanta announced appointment of industry veteran Mike Young to oversee its upcoming chip manufacturing concern in India

(With inputs from agencies)

First Published:May 31, 2023 10:02 AM IST