India is renewing its efforts to attract chipmakers to the country, as existing projects are taking time to materialize.
Sources said New Delhi is reopening the application process for $10 billion in incentives and assistance to encourage local chip-making.
The government has removed the previous 45-day deadline for submission and will accept applications until the budgeted incentives are exhausted.
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The aim of the initiative is to reduce reliance on expensive chip imports and dependence on Taiwan and China.
Despite the initial effort launched last year, only three applicants applied, none of which have made significant progress so far.
The Indian government has pledged to fund as much as half the cost of building a chip fabrication plant.
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To kick-start a domestic chip industry, companies had just 45 days to apply for fiscal support, beginning on January 1, 2022.
However, the short window led to a few applicants, including a partnership between Vedanta Resources Ltd and Taiwan’s Hon Hai Precision Industry Co, and a consortium that includes Tower Semiconductor Ltd.
India now plans to allow companies to apply again, and this means that the Vedanta and Tower groups might not be the only ones racing to win federal support for chip plants.
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India’s salt-to-software Tata conglomerate has publicly voiced its ambitions to get into chip-making, which might be another contender.
Companies who wish to apply need to make detailed disclosures, including whether they have firm, binding agreements with a technology partner for production, financing plans comprising equity and debt arrangements, the type of semiconductors they’ll make, and their target customers.
In a statement, David Reed, chief executive officer of Vedanta’s semiconductor business, said the project is “on track,” with the venture breaking ground on a site in the fourth quarter of this year and earning revenue in the first half of 2027.
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He said partner Hon Hai, also known as Foxconn, has secured “production-grade, high volume 40-nanometer technology” for the venture as well as “development grade 28-nanometer technology,” without disclosing where the tech is coming from.
Reed told to Times of India that “Foxconn and Vedanta are following the application process issued by the Indian government with confidence and partnership,”.
“We have supplied all relevant information and eagerly wait for the final approval.
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To qualify for the full 50 percent state support, a company needs to make chips using the relatively sophisticated 28-nanometer or more advanced technology.
Semiconductor production is a challenging task for metals and mining group Vedanta and its iPhone maker partner Hon Hai as neither has significant experience in manufacturing chips.
Moreover, Vedanta is also reeling under a heavy debt burden, which means Anil Agarwal’s dream to build a chip plant depends on government aid.
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The company is just weeks away from winning an in-principle or preliminary government nod, but ultimately obtaining state funding requires further difficult steps.
Any chip project, including Vedanta’s, will need to make detailed disclosures.
The difficulties faced by Vedanta underscore how hard it is to set up new semiconductor plants, massive complexes that cost billions to construct and require very specialized expertise to run.
