Foxconn takes Delhi's cash, commits to India chip plant

Taiwanese giant teams up with Vedanta for fab project

Taiwanese tech manufacturer to the stars Hon Hai Technology Group, aka Foxconn, has announced it has formed a joint venture to build semiconductors in India under the nation's electronics manufacturing subsidy scheme.

A brief announcement today reveals the JV between Foxconn and Vedanta – an Indian company that operates mines and has diversified into operating power generation assets.

Details of just what the two companies will do are scant: Foxconn's announcement states it will invest $118.7M and own 40 per cent of the business, which "will manufacture semiconductors in India."

No info been offered about what sort of semiconductors will be manufactured, the numbers to be produced, nor an expected date for manufacturing to commence. Foxconn and Vedanta are in talks with an undisclosed number of Indian state governments about a location for the plant.

But Foxconn has revealed that the project is the first to be established under India's Electronics Manufacturing & Production Linked Incentive Scheme, a program that offers subsidies to defray the cost of building chip plants on Indian soil.

The scheme encourages manufacturers to think small. Subsidies rise if manufacturers invest in smaller production nodes, so there's more cash on offer for a 28nm factory - 50 per cent of set-up costs - than the 30 per cent on offer for a 40nm facility.

Foxconn's announcement asserts its new plant will provide a "significant boost to domestic manufacturing of electronics in India." No metric of significance was offered, so The Register cannot guess what percentage of local demand the plant will meet.

The symbolic value of the announcement is easier to assess, because India's Aatmanirbhar Bharat self-sufficiency drive calls for the nation to attract foreign investment from top-tier players in order to satisfy local demand and create export industries. Landing the world's largest tech manufacturer – Foxconn holds that crown – demonstrates that India's investment magnet is achieving the first goal. And Foxconn's world-spanning operations certainly mean this new plant has a chance of creating exports. Mission, it would appear, accomplished?

Not really. India will need plenty more announcements of this sort before it gets anywhere near meeting local demand – never mind becoming a global semiconductor player. And the scheme's funding is not on a scale that suggests India will challenge other nations any time soon: subsidies on offer total $10 billion for the scheme. That's less than the €11 billion ($12.5B) the European Union has thrown at its chip industry stimulus, the $20 billion Intel is spending in Ohio or the $17 billion Samsung will spend on a new fab in Texas. ®