One key sticking point is that STMicroelectronics wants to limit the scope of the technology transfer as well as have a sunset clause regarding the duration of the joint venture, said a person close to the development.
“STMicroelectronics also has some reservations regarding its investment in the (Vedanta-Foxconn) combine. They want Vedanta to take the lead and invest more,” this person said.
Another source, who has been monitoring the deal closely, said STMicroelectronics wants to exit the joint venture after “5-10 years during which it can complete technology transfer,” the Vedanta-Foxconn combine wants the European chipmaker to stay on for longer.
Emails sent to Vedanta, Foxconn and STMicroelectronics did not elicit any response till press time.
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STMicroelectronics’ induction as a technology partner is key for the Vedanta-Foxconn consortium qualifying as a beneficiary of the central government’s Rs 76,000 crore incentive plan.
Applicants to the semiconductor incentive plan need to demonstrate clear expertise in the specialised field of semiconductor manufacturing. To receive government approval, the applicants should either own a fabrication unit for semiconductor chips in the 65-28 nanometre (nm) range or possess the “production-grade licensed technologies” to make 28 nm chips. They must also provide visibility into advanced node technologies through licensing or development, according to an official note on the requirements.
In February this year, ET had reported that the Foxconn-Vedanta combine was close to inducting European chipmaker STMicroelectronics as the technology partner in their proposed semiconductor chip manufacturing unit in India.
This was after officials from the ministry of electronics and information technology, which is the nodal ministry looking after the plan to develop a semiconductor, had last year told ET that since Vedanta or Foxconn did not have the necessary experience, they will require to onboard a third partner which had the technology as well as the manufacturing know-how.
Vedanta, which has tied up with iPhone’s contract manufacturer Foxconn to set up a semiconductor manufacturing unit in Gujarat, has announced plans to invest up to Rs 66,000 crore in the semiconductor chip manufacturing plant. The company plans to start with the manufacturing of chips in the 28 nm and lesser range.
The Vedanta-Foxconn consortium is one of the five applicants seeking government incentives under a $10-billion package announced in December 2021 to promote domestic semiconductor manufacturing. The government is committed to footing 50% of the project cost, along with other incentives.
In addition to the Foxconn-Vedanta proposal, the Centre has also received bids to set up semiconductor fabrication units from Next Orbit Ventures, which has partnered with Israel’s Tower Semiconductor as well as Singapore-based IGSS Ventures. Tower has been acquired by Intel but the merger is awaiting regulatory approvals.
Rajesh Exports and Vedanta-Foxconn are also proposing to set up display fabs.
Overall, the Vedanta-Foxconn JV had announced it will invest Rs 1.54 lakh crore, in a 60:40 ratio, to set up display and semiconductor fabrication units in Gujarat.
