Foxconn-Vedanta JV Aims To Start Semiconductor Chip Manufacturing In India As Early As 2025, Fab Likely To Located In 400-acre Land In Dholera

A joint venture between Taiwan's electronics manufacturing giant Foxconn and India's metal-mining behemoth Vedanta to build a semiconductor plant in Gujarat could start producing 12-inch wafers using the 28-nanometer process as early as 2025, according to Akarsh Hebbar, Vedanta global managing director of display and semiconductor business.

After opening, the facility would take about one year to ramp up production, after which it would be producing about 40,000 wafers per month, mainly for the Indian market, Hebbar said in an interview with CNA on Sunday (Oct 16).

Hebbar said that the joint venture is looking at setting up the fab plant in Dholera, an industrial planned city in Gujarat and is close to finalising a 400-acre location. While announcing the state's semiconductor policy, the Gujarat government announced that it would set up 'Dholera Semicon City' in the Dholera Special Investment Region near Ahmedabad to attract investors.

Hebbar expressed confidence that the project would overcome likely challenges to manufacturing chips in India, such as access to relevant supply chains and sufficient water and power resources.

In terms of securing the supply chain for the proposed semiconductor plant, Hebbar predicted that the project would bring together an "ecosystem" of more than 100 international subcontractors to the factory site, thus enhancing its operational efficiency.

Citing his own company's experience with clean room technology, which is required for semiconductor manufacturing, Hebbar said that utility guarantees and subsidies that the project had received from the Gujarat government would help the joint venture achieve its semiconductor ambitions.

In the biggest ever corporate investment in the history of independent India, the Vedanta and Foxconn joint venture on Sept 14 signed a Memorandum of Understanding (MoU) with the Gujarat government to invest ₹ 1,54,000 crore and set up a semiconductor plant in the state.

The project will likely get huge subsidies and incentives, like zero stamp duty on land purchase and subsidised water and electricity, under the 'Gujarat Semiconductor Policy 2022-27' announced by the state government in July this year.

Under this policy, eligible projects will be given a 75% subsidy on the purchase of the first 200 acres of land for setting up manufacturing units.

The eligible projects will be provided good quality water at the rate of ₹12 per cubic metre for the first five years.

If the investor decides to build its own desalination plant for captive use in the initial five years, the government will provide a capital subsidy of 50% of the project cost, according to the policy document.

The eligible manufacturing units would also get a power tariff subsidy of ₹2 per unit for the first 10 years of going into production and can also be exempt from paying any electricity duty.

To encourage investors under the policy, the state government has also announced to reimburse 100% of stamp duty which investors would pay for the first time for taking land on lease, sale or land transfer.