The new factory will be built in the Indian PM’s home state of Gujarat
Taiwanese semiconductor giant Foxconn and Indian mining conglomerate Vedanta have announced a deal with the Indian government to build one of the first semiconductor manufacturing facilities in the country. The $19.5 billion deal will yield a new facility in Gujarat, the home state of Indian prime minister Narendra Modhi. Foxconn and Vedanta announced the partnership to bring semiconductor manufacturing to India earlier this year, but this announcement, pursuant to a new Memorandum of Understanding (MoU) with the Indian government, solidifies those plans.
The specific location of the facility is still yet to be determined, according to Vedanta chairman Anil Agarwal, but he said 400 acres or so the businesses will need to build the factory will be near Gujarat’s capital, Ahmedabad. The businesses predict that the new project will ultimately yield about 100,000 local jobs, and should be operational within two years.
“Spectrum and silicon are the two prime raw materials of today’s digital world,” said Agarwal, who heads the new Vedanta/Foxconn joint venture.
Indeed, India recently concluded a $19 billion auction of 5G spectrum, with explicit orders to Indian operators to have 5G operations running by October. There appears already to be pent-up consumer demand for 5G in the country, if a recent Ookla survey is any indication: 89% of respondents said they’ll upgrade to 5G, with almost half (48%) saying they’ll upgrade as soon as possible.
Indian efforts to draw in semiconductor manufacturing using subsidies and bureaucracy reductions aren’t unique, of course. Similar efforts are underway in the European Union and United States to spur more local manufacturing efforts. Building semiconductors in the country is another vital step for Indian telecom, as companies like Apple seek to diversify suppliers away from China, which can provide massive manufacturing scale but has also been the source of repeated supply chain disruptions related to COVID. Apple and others are also under increasing pressure from the Indian government to source manufacturing and assembly closer to home, as they seek to sell more products to the country’s more than 1.17 billion subscribers and burgeoning middle class.
That focus on self-reliance was the spotlight Agarawal used in a series of tweets announcing the new deal. Agarwal called the agreement a step towards making “India’s Artmanirbhar (Hindi for “self-reliant”) Silicon Valley a reality… the journey from being a Chip Maker to a Chip Taker has officially begun.”
Dealing with India’s infamous government bureaucracy is top of mind for any company setting up business in the country. Agarwal made a point to thank the government and IT minister Ashwini Vaishnaw for helping to ease that burden. Bhupendrabhai Patel, chief minister of the state of Gujarat, told reporters at a Tuesday press conference that government departments will provide a “red carpet” to get the project completed quickly.
