invest $7.4 billion in a chip manufacturing unit in partnership with Hon Hai Technology Group (Foxconn), a top executive told ET.
The company has already applied for the government’s incentive scheme and is hoping to ready the manufacturing facility by 2024, Akarsh Hebbar, global managing director of Vedanta Group’s display and semiconductor business, said.
The company will target smartphones and electronics with the 28-nanometre (nm) fab and look at 70-80% domestic market, while the rest will be exported.
Hebbar also said that Foxconn, though with no prior manufacturing experience in semiconductors, was the perfect partner for the project owing to its global footprint in electronics manufacturing.
“The total project cost for 28 nanometres is around $7-$8 billion,” Hebbar said. “We want to make sure that the plant comes on board by 2024. We are looking at the site, equity structure and more. Foxconn is investing around $118 -$120 million.”
He said Vedanta was looking to invest $15 billion phase-wise as a combination of debt and equity, of which around $5 billion will be for semiconductors and $10 billion for displays.
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With 28 nm chips, Vedanta is eyeing the mobile phone and consumer electronics space but will eventually explore a foray into automobiles where it will be 28 nm or less.
“We want to focus on the domestic market and want to sell around 70-80% locally and export value can come in accordingly depending on the cycle to around 30-20%,” Hebbar said. “We are very hopeful that the government approval will come in the next 3-4 months.”
Hebbar said the company was not fazed by Foxconn’s lack of experience in semiconductor manufacturing as it believed that the Taiwanese assembler for Apple Inc had the “right technology” owing to its vast understanding of the global electronics manufacturing industry.
“It is a $200 billion market cap company, they themselves use $30-$42 billion worth of semiconductors chips and they have the right technology,” he said. “They are no stranger to semiconductor chips. Foxconn is yet to manufacture the 28 nanometre chips, they have started it in 7-8 factories globally but the experience they have is good. Foxconn has the right engineers to build this.”
Vedanta is assessing both brownfield and greenfield options for its manufacturing facility. Hebbar said that if they find a brownfield facility, the project can be completed by 2024. If it is a greenfield project, it will likely be completed by 2025-2026.
“We are evaluating two-three sites as of now,” Hebbar said. “Foxconn already has sites here and they are the experts in deciding this. We are looking at places that are viable for technologies to be built there. We are also in discussion with several states on this. Access to a port, water supply, power supply and talent is what we are looking at.”
According to the MOU signed between the two companies, Vedanta will hold the majority stake in the joint venture. Vedanta chairman Anil Agarwal will be the chairman of the JV.
The government has put in place a Rs 76,000 crore incentive scheme for the sector, with the aim of creating a comprehensive ecosystem for semiconductor chip design, packaging and manufacturing that can attract global investment. The funding, which will be provided over a period of six years, is expected to bring in investment of up to Rs 1.7 lakh crore.
