While the Vedanta Group had earmarked $15 billion to develop its semiconductor manufacturing business over the next 10-15 years, around $7-8 billion will be invested in the first plant proposed to be set up as a joint venture (JV) with Foxconn. Another $3-4 billion will be invested to set up display fab, a senior company official said.
Vedanta Group hold 60 per cent stake in the joint venture, while Foxconn will own 40 per cent. Foxconn will also bring additional investment of around $118 million into the venture. The Apple supplier will bring in investment in a monetary and equity mix along with its technological know-how.
The joint venture will be helmed by Vedanta Group founder Anil Agarwal.
In an interview with BusinessLine, Akarsh Hebbar, Global Managing Director of Vedanta Group’s Display and Semiconductor business, said, “We will invest $15 billion in the ecosystem in the 10-15 year plan. First phase will be of $7-8 billion for semiconductor facility and around $3-4 billion for display fab. This constitutes a substantial amount of what is planned. The balance amount may be will be used for equipment. But we will invest more in subsequent phases. We want to build both semiconductors (chipsets) and displays in the same facility, but that call we will take eventually.”
“We had been in talks with Foxconn for a while now. The credit goes to this very good PLI Scheme for semiconductors that the government came out with. And Vedanta has been working well with the government. It was a natural and strategic foray for us since we have been into display glass and optical fibre. Foxconn brings the right technology for setting up 28 NM fab, which 90 per cent of Indian electronics are using,” he added.
The JV has already signed three-four MoUs on the customer side with Japanese and Korean electronics majors for telephones, laptops and smartphones. These customers are interested in both semiconductors and displays that will be produced by the company, Hebbar said. The company will also be exploring supply chain elements with these customers.
Plans ahead
The company will be manufacturing 28 NM node of chipset, which Hebbar said is well-tested, has demand and is sufficient for the Indian market. The company will be looking to cater to smartphone makers and consumer electronics segments including laptops and televisions apart from ICTs, defence and some use cases of the automotive sectors.
To settle on a location for the facility, Vedanta Group is currently in talks with the Gujarat, Telangana, Maharashtra and Karnataka state governments among others, evaluating incentives and access these regions could provide.
Within incentives, the four key deciding factors will be a good EDSM policy, capital subsidy for an electronics cluster to come around and a good supply to high fidelity electricity and water supply for a long period of 10-20 years. Hebbar said that the evaluation will begin in a few weeks, and the company is negotiating for a 10-20 per cent subsidiary. Besides this a good port access and high-quality talent access will be important.
The factory is expected to be built and become operational by 2024-25; post that the company will take another six-eight months to ramp up the facility and start production.
Hebbar said, “With this facility, we are planning to capture 30-40 per cent of the Indian chipset market. That leaves the rest of the market for anyone who wants come in and we want more players to enter this segment in India. From our production, we are looking to export 25-30 per cent of our chips and rest will be supplied domestically. Mostly we will use it locally, but depending on the demand cycle we can always change the export-import ratio.”
Hebbar isn’t worried about competition from mammoths like Qualcomm and Intel as he believes that going by the advanced chipsets of 3-6NM these companies produce, they wouldn’t be a competition for them. “The design that we are going to use is very well-used by local phones like Vivo, Oppo and laptop brands,” he said.
The company wants to ramp up R&D eventually and tie-up with educational institutions which will help them to move to the latest and smaller nodes like 16NM in another 8-10 years. It will also be leveraging Foxconn’s network in this space.
Talent acquisition
Hebbar said that his factory will alone create 100,000 jobs directly and indirectly in India. As of now, the company is hiring about 100-150 people in the construction phase. These are going to be management level hires and highly skilled talent.
He added, “We have to hire people from the industry who are probably not in India. We are planning to include engineers from within Vedanta to start building the know-how. We have around 20,000 engineers in the group.”