India chip plan stalls after Tower-Intel deal in setback to Modi

Tower Semiconductor

31/05/2023 19:09

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      India's Modi wants to make country a chipmaking hub
    

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      Companies struggling to move ahead with plans-sources
    

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      Intel-Tower deal stalls a consortium's chip plans-sources 
    

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      Vedanta-Foxconn mega JV also proceeding slowly
    

  
    By Munsif Vengattil, Aditya Kalra and Jane Lanhee Lee
       NEW DELHI/OAKLAND, California, May 31 (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
 2317.TW  is also proceeding slowly as their talks to rope in
European chipmaker STMicroelectronics  STMPA.PA  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  TSEM.TA  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)
 ((munsif.vengattil@thomsonreuters.com;))