Foxconn and STMicro Explore Partnership tFoxconn and STMicro Explore Partnership to Establish Semiconductor Plant in Indiao Establish Semiconductor Plant in India

08 Sep, 2023

Foxconn and STMicro Explore Partnership to Establish Semiconductor Plant in India

Foxconn Technology Group and STMicroelectronics NV have joined forces to pursue the establishment of a semiconductor manufacturing facility in India. Their objective is to secure support from the Indian government to expand their presence in the South Asian nation.

The collaboration between Taiwan-based Foxconn and Franco-Italian company STMicro involves seeking state assistance for the construction of a 40-nanometer chip plant, sources familiar with the matter have revealed. These 40-nanometer chips find applications in various products such as automobiles, cameras, printers, and a wide range of machinery.

This strategic move by Foxconn follows the dissolution of its previous partnership with billionaire Anil Agarwal's Vedanta Resources Ltd., which made minimal progress over the course of a year. By teaming up with STMicro, Foxconn, a renowned contract manufacturer, aims to leverage the expertise of a pioneer in the semiconductor industry, enabling it to expand its presence in the highly lucrative yet challenging semiconductor sector.

The previous setback with Vedanta underscores the formidable challenges associated with establishing semiconductor plants, which are massive complexes requiring billions of dollars in investment and specialized operational know-how. Neither Foxconn nor Vedanta possessed substantial prior experience in chip manufacturing, and their joint venture was hindered by difficulties in finding a partner with production-ready chip technology and obtaining approvals for state subsidies.

New Delhi has reportedly requested additional details from Foxconn, best known as Apple Inc.'s primary assembly partner, regarding its collaboration with STMicro. Additionally, Foxconn is said to be engaged in discussions with several other companies possessing chip manufacturing capabilities.

Despite India's efforts to enhance its domestic chip production capabilities, thereby reducing reliance on costly imports and diminishing dependence on Taiwan and China, the country's technology ministry has not provided any official comments on the matter. Notably, Prime Minister Narendra Modi has pledged $10 billion to attract chip manufacturers, offering to cover half of the expenses involved in setting up semiconductor facilities. This initiative has led U.S. memory chip firm Micron Technology Inc. to announce a $2.75 billion assembly and testing facility in Modi's home state of Gujarat.

Any chip-related project in India, including Foxconn's, will be required to disclose comprehensive information, including the existence of binding agreements with technology partners for production, as well as financing strategies involving equity and debt arrangements. Applicants must also specify the types of semiconductors they intend to manufacture and identify their target customer base.

Notably, other prominent chip-related companies are also making strides in India, including Advanced Micro Devices Inc. and equipment manufacturer Applied Materials Inc., both of which have announced plans to allocate $400 million each for research and development initiatives and the establishment of engineering centers in the bustling technology hub of Bengaluru.

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