Foxconn and STMicro Collaborate to Construct Chip Factory in India
Foxconn Technology Group and STMicroelectronics NV are joining forces to submit a joint bid for the construction of a semiconductor factory in India. The aim is to secure state support and expand their presence in the South Asian nation.
Taiwan’s Foxconn and Franco-Italian STMicro are seeking government support for a 40-nanometer chip factory, people familiar with the matter said, asking not to be identified because the plan is not public. Such mature chips are used in cars, cameras, printers and many other machines.
The move comes after Foxconn’s venture with billionaire Anil Agarwal’s Vedanta Resources Ltd fell apart after a year of little progress. In cooperation with STMicro, the contract manufacturer Foxconn uses the expertise of the pioneer of the chip industry to expand the profitable but difficult semiconductor business.
The failure of Foxconn’s earlier venture with metals company Vedanta highlights how difficult it is to set up new semiconductor factories, massive complexes that cost billions of dollars to build and require highly specialized skills. Neither Foxconn nor Vedanta have significant prior experience in chip manufacturing, and their joint venture was hampered by delays in finding a production-ready chip technology partner and approval of government subsidies.
New Delhi has asked Foxconn, best known as Apple Inc’s main assembly partner, for more details on its partnership with STMicro, the people said. Foxconn is also in talks with a few other companies that have chip-making technology, one of the people said.
India’s technology ministry did not respond to a request for comment. Foxconn and STMicro spokespeople declined to comment.
India, like countries like the US, is trying to increase chip production to reduce dependence on expensive imports and reliance on Taiwan and China. Prime Minister Narendra Modi has pledged $10 billion to lure chipmakers and promises his administration will cover half the cost of setting up semiconductor plants. That effort has prompted U.S. memory chip firm Micron Technology Inc. to announce a $2.75 billion assembly and testing facility in Modi’s home state of Gujarat.
Details of any chip project, including Foxconn’s, must be disclosed, including whether it has strict, binding manufacturing contracts with a technology partner and financing plans that include equity and debt arrangements. Applicants must also state the types of semiconductors they manufacture and their target customers.
Other chip-related companies moving into India include Advanced Micro Devices Inc. and equipment maker Applied Materials Inc., which plan to spend $400 million each on R&D and engineering centers in the southern tech hub of Bengaluru.
