Foxconn, STMicro to collaborate for semiconductor factory in India

Foxconn Technology Group is partnering with STMicroelectronics NV to jointly pursue the establishment of a semiconductor manufacturing facility in India. They are actively seeking government support to expand their presence in the South Asian nation.

Sources report that Taiwan’s Foxconn and the Franco-Italian company STMicroelectronics are in the process of seeking government assistance for the development of a 40-nanometer chip manufacturing facility. They have requested anonymity since the plan has not been made public. 

These advanced chips are used in various devices, including automobiles, cameras, printers, and a diverse range of other machinery.

This development follows the collapse of Foxconn’s plans for collaboration with billionaire Anil Agarwal’s Vedanta Resources Ltd. after a year of limited progress. By joining forces with STMicro, contract manufacturer Foxconn is relying on the experience of an innovator in the semiconductor industry to facilitate its expansion into the Indian semiconductor business.

The previous unsuccessful endeavor by Foxconn with metals company Vedanta serves as a reminder of the challenges associated with establishing new semiconductor plants. These giant complexes involve several billion-dollar investments and demand highly specialized knowledge for operation. Neither Foxconn nor Vedanta possessed enough prior experience in chip manufacturing, and their joint venture encountered setbacks due to delays in securing a partner with readily available chip technology and obtaining approvals for state subsidies.

The government in New Delhi has reportedly requested additional information from Foxconn, primarily recognized as Apple Inc.’s primary assembly partner, regarding its collaboration with STMicro. 

Meanwhile, Foxconn is said to be engaged in discussions with some other firms possessing chip manufacturing expertise, according to one of the sources.

Spokespersons from both Foxconn and STMicro declined to make any comments on a possible partnership.

India, much like other nations such as the United States, is actively working to increase its semiconductor production capabilities, to reduce its dependence on costly imports and its reliance on Taiwan and China. The Indian government has pledged $10 billion to attract semiconductor manufacturers, and the government has promised to cover half the cost of the plant. 

This initiative has encouraged US memory chip company Micron Technology Inc. to announce a $2.75 billion assembly and testing facility in the state of Gujarat.

Any semiconductor project, including Foxconn’s, will be required to provide transparency, which should contain the existence of firm, legally binding agreements with a technology partner for production. Furthermore, these disclosures should outline the financing strategy for both equity and debt arrangements. Applicants are also expected to disclose the specific semiconductor types they intend to manufacture and identify their target audience.

Other semiconductor companies industry with investment plans for India include Advanced Micro Devices Inc. and equipment manufacturer Applied Materials Inc. Both have intentions to invest $400 million each in research and development (R&D) and engineering facilities in Bengaluru, southern India.