Vedanta set for $15-billion play in semiconductor, display unit ventures

Anil Agarwal-led Vedanta Group is getting ready for two separate ventures that may see investments worth $15 billion in chip and display manufacturing space in India. One will be with Hon Hai Technology Group (also known as Foxconn) to manufacture 28-nano meter semiconductor chips based on a technology developed by the Taiwanese multinational. The other venture is meant for a display manufacturing unit.

For the display venture, the company is in talks with at least seven global majors including LG, Sharp and Japan Display for a potential technology or equity partnership.

There will be two separate special purpose vehicles (SPVs), according to Akarsh Hebbar, managing director of Avanstrate, a Vedanta Group firm that will spearhead the chip business. ‘’For chip manufacturing, it will be a 60:40 joint venture between us and Foxconn, where two equity partners are sufficient and Foxconn will bring the technology,’’ Hebbar said.

Avanstrate is looking for around 450 acres of land for both these ventures. It’s looking at several states including Gujarat, Maharashtra, Tamil Nadu and Karnataka. On February 14, the companies had formed a joint venture (JV) to manufacture semiconductors. This was the first tie up in the electronics manufacturing space after the government announcement of the an incentive policy.

Vedanta expects to start manufacturing 28-nano meter chips, which are the most used ones in India, by 2026, and expects to produce around 60,000 units per month. The display venture is likely to be on track by 2024.

Vedanta had acquired AvanStrate, a Japanese glass substrate manufacturer, in 2017. Since the company already has glass substrate technology, the new partner will bring in the balance of technological requirement. Hon Hai, along with its subsidiaries including Foxconn, is the world's largest electronic manufacturing services (EMS) player with a market share exceeding 40 per cent. This is the first time that the company will make 28 nanometer chips, end-to-end completely, using the IP it acquired.

The government came out with an incentive scheme for semiconductor and display manufacturing eco-system with an outlay of Rs 76,000 crore in December 2021. This was followed by the launch of India Semiconductor Mission (ISM), targeting mega investments for manufacturing facilities in the sector.

Out of the $15 billion investment lined up for both projects in the next 10 years, around $11-12 billion is expected to come during the first phase. Around $7 billion is meant for semiconductors and the remaining for the display unit. For display, companies such as LG, Toshiba and Lava International could be targeted, Hebbar said. Vedanta will also focus on LCD display during the first phase and will look at OLED during the second phase, he pointed out.