Vedanta, Foxconn signs MoU with Gujarat government to set up a semiconductor unit in the state

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In a boost to the government’s semiconductor mission, Anil Agarwal led Vedanta Group and electronic manufacturing giant Foxconn of Taiwan signed a Memorandum of Understanding (MoU) with the Gujarat Government on 13 September 2022 to set up a FAB manufacturing unit in the state. The manufacturing unit which will include display and semiconductor facilities will be set up near Ahmedabad.

Update on 16 September 2022

The Vedanta Limited has issued a clarification on 16 September 2022 that Volcan Investments would undertake the business of manufacturing semi-conductors and not Vedanta Limited. Volcan Investments is a holding company wholly owned by the Agarwal family trust. It is also the majority shareholder of the London based  Vedanta Resources and owns more than 50 percent stake in Vedanta India. However, unlike Vedanta India, Volcan Investments is unlisted.

• The agreement was signed in the presence of Union Minister for Railways, Communication, Electronics and Information Technology Ashwini Vaishnaw.
• A fab (fabrication facility) is short for fabrication plant where raw silicon wafers are processed and turned into integrated circuits.

IMPORTANT FACTS -

Joint Venture partners :

• The manufacturing giant Foxconn will be the technical partner in the Joint venture while the  oil-to-metals conglomerate Vedanta is financing the project, as it looks to diversify into chip manufacturing.
• Under the Joint Venture , Volcan Investment will hold a majority stake of up to 60%, and the remaining 40% will be held by Foxconn.
• The total investment in the manufacturing unit will be Rs 1, 54,000 crore to set up the facility in Gujarat which is expected to create one lakh job opportunities.

Other Chip manufacturing proposals :

• Vedanta is the third company to announce a chip plant location in India after international consortium ISMC and Singapore-based IGSS Ventures, which are setting up in the southern states Karnataka and Tamil Nadu, respectively.
• The world chip market is dominated by China and Taiwan and India wants to be self-sufficient in this critical technology

India’s Semiconductor Mission :

• On 29 December 2022, the Information Technology Minister, Ashwini Vaishnaw, launched the India Semiconductor Mission.
• Under the policy, the government will provide Rs 76000 crore incentives for companies setting up manufacturing facilities in India.
• This was done by the government to encourage companies to set up chip manufacturing plants in India.

What is semiconductor :

• Semiconductors are materials which have a conductivity between conductors and insulators. They can be pure elements, silicon or germanium or compounds; gallium, arsenide or cadmium selenide.
• They are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products.
• These chips are now an integral part of contemporary automobiles, household gadgets and essential medical devices such as ECG machines.

Fabrication units in India :

• Currently, India has two fabrication facilities (fab).One is Society for Integrated Circuit Technology and Applied Research (SITAR) of the Defense Research and Development Organisation (DRDO) in Bengaluru and a semiconductor laboratory in Chandigarh, which builds silicon chips for strategic purposes like defense and space and not for commercial use.

ADDITIONAL INFORMATION -

Vedanta limited :

• It is a multinational company headquartered in Mumbai, India. 
• It is in the business of Zinc-Lead-Silver, Iron ore, Steel, Copper, Aluminium, Power, Oil and Gas.
• The Chairman of Vedanta group: Anil Aggarwal