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Billionaire Anil Agarwal wants to build a chip plant in India with Apple supplier Foxconn, but hurdles are mounting

  • A venture between Anil Agarwal’s Vedanta Resources and Taiwan’s Foxconn, announced last year, has yet to obtained enough financial backing
  • Prime Minister Narendra Modi has launched a US$10 billion drive to jump start local chip production to reduce dependence on Taiwan and mainland China

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A man walks past the logo of Vedanta outside the firm's headquarters in Mumbai, India. Photo: Reuters
Bloomberg

Billionaire Anil Agarwal’s plan to build a US$19 billion chip-making plant in India is floundering as his venture struggles to secure a technology partner and faces challenges in obtaining financial incentives from the government.

Seven months after Agarwal announced a chip partnership between his Vedanta Resources and Taiwan’s Hon Hai Precision Industry, the venture is yet to tie up with a fabrication unit operator or licence manufacturing-grade technology, people familiar with the matter said. One of those is required for the venture to receive the significant financial incentives the government has pledged for such projects.
The venture’s difficulties highlight how hard it is to set up new semiconductor plants, massive complexes that cost billions to construct and require very specialised expertise to run. Metals and mining group Vedanta and iPhone assembler Hon Hai, also known as Foxconn Technology Group, have no significant chip-making experience, yet they are among the first to try to take advantage of India’s ambition to build a semiconductor industry.

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Winning government funding is key to fulfilling Agarwal’s chip dream, given his broader empire is facing intensifying financial strain. The billionaire, struggling to shake off the weight of a massive debt pile in his commodities business, is considering divesting a less than 5 pr cent stake in Mumbai-listed Vedanta in a last-ditch effort to reduce borrowings, Bloomberg News reported last month.

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The venture’s discussions with GlobalFoundries and STMicroelectronics to license chip fabrication technology have not resulted in agreements, the people said, asking not to be identified as the discussions are private. It is unclear if the talks are still alive.

Vedanta, in an emailed response to questions, said it is committed to the plant and has “identified a strong technology partner to make this project a huge success”. It did not name the partner or say whether an agreement has been reached.

Anil Agarwal, chairman of Vedanta Resources, at a news conference in Mumbai, India in this file photo dated April 24, 2007. Photo: Bloomberg
Anil Agarwal, chairman of Vedanta Resources, at a news conference in Mumbai, India in this file photo dated April 24, 2007. Photo: Bloomberg

Hon Hai did not respond to requests for comment. GlobalFoundries, STMicro and India’s technology ministry also did not immediately respond to queries.

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