Indian semiconductor localization is a dream, or reality ?

International Business News – India has begun to promote plans for the localization of semiconductors, and on September 13, Vedanta, a major Indian resource company, announced that it would join hands with Foxconn Technology Group to build a joint venture factory for semiconductors and LCDs in the western state of Gujarat. As India started late in the cultivation of the semiconductor industry, political and local expectations for the localization of semiconductors have risen sharply. However, the main body of the project is still unstable, and it is uncertain whether the plant will start successfully.

“This will be a big step for India to achieve self-sufficiency in the important field of semiconductors,” Vedanta said in a statement on Sept. 13, stressing the significance of the plant in Gujarat. Vedanta said the total investment is 154 million rupees and is expected to create 100,000 jobs. It is envisaged to produce products with a circuit width of 28 nanometers and is being discussed to be completed within 2 years.

Resource company Vedanta enters high-tech business

Vedanta is mainly engaged in resource development business in oil, gas and metals. In recent years, the company has taken AvanStrate (located in Shinagawa-ku, Tokyo), a Japanese LCD panel glass maker, under its wing, and is developing its high-tech business and will enter the semiconductor market when it is well prepared. Anil Agarwal, chairman of Vedanta, said, “We feel honored to take a step forward in a strategic area and support Prime Minister Modi’s vision of ‘Self-Reliant India’.”

As a policy to revitalize the manufacturing sector, the Modi government has proposed “Make in India”. India has been dependent on overseas imports for semiconductors, and a shortage of semiconductors has affected the production of cars and electronic devices since the second half of 2021. According to local media, banks in India have recently asked the government to intervene due to delays in issuing cash cards and other products due to a shortage of semiconductor chips.

For the Indian government, the immediate priority is to nurture the semiconductor industry. Recently, India has introduced a policy of investing 760 billion rupees to incentivize the production of semiconductors and LCDs. Vedanta and Foxconn’s plan is also likely to be the target of support. Modi tweeted, “This is a step to make semiconductor production ambitions accelerate,” and expects spillover effects on related SMEs and others.

Modi is also looking forward to building semiconductor factories on his “old turf”

Gujarat, where the semiconductor plant is scheduled to be built, is also Modi’s “old turf” where he served as chief minister. The state is actively pursuing investment in manufacturing, and Suzuki also has a plant here. ” We will provide all the support so that it can be started as soon as possible,” said Patel, the state’s chief minister, commenting on Vedanta’s plans. The local atmosphere is full of welcome for the construction of the plant.

According to the Indian Electronics and Semiconductor Association (IESA) and others, the demand for portable and wearable terminals and products for IT purposes accounts for the majority of the semiconductor market in India. The market size is expected to reach $64 billion in 2026, growing to more than twice the level of 2021. If semiconductor in-house manufacturing is achieved, it will be able to capture these demands.

The stock market is also keen on India’s semiconductor projects, with the Bombay Stock Exchange listed shares of Vedanta attracting a lot of buying, with the share price hovering around Rs 270 crore and briefly surpassing Rs 320 crore on September 15. But there are some clouds. Vedanta made a surprise announcement on the same day, saying, Volcan Investments (unlisted), our holding company, will not be in charge of semiconductor production. The market was skeptical, and Vedanta shares closed down more than 7 percent from the previous day.

Can Vedanta dispel the gloom and start semiconductor production as planned? The market is likely to waver and waver with Vedanta for some time.