By Munsif Vengattil, Aditya Kalra and Jane Lanhee Lee NEW DELHI/OAKLAND, California (Reuters) – A planned $3 billion semiconductor facility in India by a consortium that counted Israeli chipmaker Tower as a tech partner has been stalled due to the company’s ongoing takeover by Intel, three sources said, dashing India’s chip making plans. A second […]
Exclusive-India chip plan stalls after Tower-Intel deal in setback to Modi
By Munsif Vengattil, Aditya Kalra and Jane Lanhee Lee
NEW DELHI/OAKLAND, California (Reuters) – A planned $3 billion semiconductor facility in India by a consortium that counted Israeli chipmaker Tower as a tech partner has been stalled due to the company’s ongoing takeover by Intel, three sources said, dashing India’s chip making plans.
A second mega $19.5 billion plan to build chips locally by a joint venture between India’s Vedanta and Taiwan’s Foxconn is also proceeding slowly as their talks to rope in European chipmaker STMicroelectronics as a partner are deadlocked, a fourth source with direct knowledge said.
The challenges faced by the companies deal a major setback to Prime Minister Narendra Modi, who has made chipmaking a top priority as he wants to “usher in a new era in electronics manufacturing” by luring global companies.
India, which expects its semiconductor market to be worth $63 billion by 2026, last year received three applications to set up plants under a $10 billion incentive scheme. They were from the Vedanta-Foxconn JV; a global consortium ISMC which counts Tower Semiconductor as a tech partner; and from Singapore-based IGSS Ventures.
The Vedanta JV plant is to come up in Modi’s home state of Gujarat, while ISMC and IGSS each committed $3 billion for plants in two separate southern states.
Three sources with direct knowledge of the strategy said ISMC’s $3 billion chipmaking facility plans are currently on hold as Tower could not proceed to sign binding agreements as things remain under review after Intel acquired it for $5.4 billion last year. The deal is pending regulatory approvals.
Talking about India’s semiconductor ambitions, India’s deputy IT minister Rajeev Chandrasekhar told Reuters in a May 19 interview ISMC “could not proceed” due to Intel acquiring Tower, and IGSS “wanted to re-submit (the application)” for incentives. The “two of them had to drop out,” he said, without elaborating.
Tower is likely to reevaluate taking part in the venture based on how its deal talks with Intel pan out, two of the sources said.
ISMC consortium partners Next Orbit Ventures did not respond to a request for comment and Tower declined comment. Intel also declined comment.
Singapore-based IGSS did not respond, and neither did India’s federal IT ministry.
STMicro declined comment.
In a statement, Vedanta-Foxconn JV CEO, David Reed, said they have an agreement with a technology partner to transfer technology with licenses, but declined to comment further.
(Reporting by Aditya Kalra and Munsif Vengattil in New Delhi, and Jane Lanhee Lee in Oakland, California; Additional Reporting by Steven Scheer, Editing by Nick Zieminski)