Vedanta’s $20 billion semiconductor project in Gujarat with Foxconn

Vedanta's $20 billion semiconductor project in Gujarat

What has happened –

  • India’s oil-to-metals conglomerate Vedanta on Tuesday said the company and electronics manufacturing giant Foxconn will together set up a semiconductor and display FAB manufacturing unit in Gujarat. Both companies will invest Rs 1,54,000 crore for establishing the facility in the state.
  • Vedanta Limited is an Indian multinational minin company headquartered in Mumbai, India, with its main operations in ore, gold and aluminium mines in Goa, Karnataka, Rajasthan and Odisha
  • You can click here to know about Tata’s plan to produce iphones in India.

What is a Chipset?

  • A chipset acts like the motherboard’s communications center and traffic controller, It ultimately determines what components are compatible with the motherboard-including the CPU, RAM, hard drives, and graphics cards. It also dictates your future expansion options, and to what extent, if any, your system can be overclocked.

MOU signed –

  • Vedanta and Foxconn on Tuesday also signed a memorandum of understanding with the Gujarat government to set up the unit in the state. The MoU was signed in the presence of Minister for Railways, Communications, Electronics & Information Technology, Ashwini Vaishnaw, at a function held in Gandhinagar.
  • Both companies would invest Rs 1,54,000 crore to set up the facility in Gujarat, which would create one lakh job opportunities, Gujarat Chief Minister Bhupendra Patel said on the occasion. Patel also said his government will provide cooperation to set up the facility and to make it a success.

Gujarat beat another states –

  • Other regions including India’s richest state of Maharashtra in west and Telangana and Karnataka in the south had also been in the running to host Vedanta-Foxconn’s mega project. But in the last leg of negotiations in recent weeks, Gujarat pipped Maharashtra to the post.
  • Vedanta obtained financial and non-financial subsidies including on capital expenditure and cheap electricity from Gujarat to build the semiconductor plants. While lobbying for incentives, Vedanta had sought 1,000 acres of land free of cost on a 99-year lease, and water and power at concessionary and fixed prices for 20 years, Reuters reported. The project will be setup near Ahmedabad.
  • The Vedanta Group has an initial investment plan of $2 billion for the semiconductor unit which would go up to $20 billion as the company scales up the project.

Vedanta selected under PLI Scheme

  • Vedanta is amongst the five companies which have applied for the government’s Rs 76,000-crore incentive scheme for development of semiconductors and display manufacturing ecosystem in the country.
  • In fact, Vedanta has submitted two proposals – one where it has formed a joint venture with Foxconn for manufacturing chips and the second, on its own for display fabs.

But will Vedanta succeed?

  • The company is confident of getting global orders once its semiconductor manufacturing unit is up and running in India. Vedanta Group is already into manufacturing fab glasses and optic fibre globally, so it is not going to be a new business for the company.
  • “We already make fab glasses in Japan, South Korea, and Taiwan and have 20,000 people working for us, so we are already in the business,” Agarwal had said.
  • He had added that funds for the semiconductor business – which is capital intensive and has a long gestation period – in India would not be a problem, As other businesses like oil and gas, mining, iron and steel would generate enough cash to feed the fab unit.

India’s chip market –

  • India’s semiconductor market is estimated to reach $63 billion by 2026 from $15 billion in 2020, the government says. Most of the world’s chip output is limited to a few countries like Taiwan and late entrant India is now actively luring companies to “usher in a new era in electronics manufacturing” as it seeks for ways to have seamless access to chips.
Sodhi Gautam

Sodhi Gautam

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