ISMC’s India chip plan stalls after Tower-Intel deal in setback to Modi
- India, which expects its semiconductor market to be worth US$63 billion by 2026, last year received three applications to set up chip plants
- Tower is likely to re-evaluate taking part in the India venture based on how its deal talks with Intel pan out, according to two sources
A planned US$3 billion semiconductor facility in India by chip consortium ISMC that counted Israeli chip maker Tower as a tech partner has been stalled due to the company’s ongoing takeover by Intel, three sources said, dashing India’s chip making plans.
A second mega US$19.5 billion plan to build chips locally by a joint venture between India’s Vedanta and Taiwan’s Foxconn is also proceeding slowly as their talks to rope in European chip maker STMicroelectronics as a partner are deadlocked, a fourth source with direct knowledge said.
The challenges faced by the companies deal a major setback to Prime Minister Narendra Modi, who has made chipmaking a top priority as he wants to “usher in a new era in electronics manufacturing” by luring global companies.
India, which expects its semiconductor market to be worth US$63 billion by 2026, last year received three applications to set up plants under a US$10 billion incentive scheme. They were from the Vedanta-Foxconn JV; a global consortium ISMC which counts Tower Semiconductor as a tech partner; and from Singapore-based IGSS Ventures.
The Vedanta JV plant is to come up in Modi’s home state of Gujarat, while ISMC and IGSS each committed US$3 billion for plants in two separate southern states.
Three sources with direct knowledge of the strategy said ISMC’s US$3 billion chipmaking facility plans are currently on hold as Tower could not proceed to sign binding agreements as things remain under review after Intel acquired it for US$5.4 billion last year. The deal is pending regulatory approvals.
Talking about India’s semiconductor ambitions, India’s deputy IT minister Rajeev Chandrasekhar told Reuters in a May 19 interview ISMC “could not proceed” due to Intel acquiring Tower, and IGSS “wanted to resubmit (the application)” for incentives. The “two of them had to drop out,” he said, without elaborating.