Reliance Industries (RIL) and software giant HCL are independently “evaluating” deals to buy 30% equity stakes each in semiconductor wafer fab applicant ISMC Analog. This indicates increased interest in India’s bold initiative to establish a semiconductor manufacturing ecosystem in the nation.
According to insiders, the oil-to-telecom conglomerate and the HCL created by Shiv Nadar are both expected to contribute through subsidiaries, and the combined investment from both sides may exceed Rs 4,000 crore ($500-600 million). One of three candidates seeking subsidies under the Centre’s Rs 76,000-crore Semicon India program is ISMC Analog, a partnership between Mumbai-based Next Orbit Ventures and Israeli technology company Tower Semiconductor. It has decided to construct its $3 billion fab in an electronics hub close to Mysuru.
One person with knowledge of the specifics claims that ISMC Analog will “extend its board to include nominee directors to acknowledge the (new) investors” in accordance with the deal’s present terms. According to the source, 15% of the venture would remain owned by technology partner Tower.
A term sheet contains information regarding commercial terms but is not an enforceable contract between two parties. Rather, it is a “non-binding” expression of interest. The deals will proceed to definitive agreements after due diligence is finished.
If the agreements are successful, Vedanta will be followed by RIL and HCL as the largest companies to compete for chip manufacturing in India, which is seen as a strategic move for the nation.
The ISMC deal gives HCL access to the Indian market for its semiconductor engineering and R&D services provided across fabs globally.
It is likely to be one of its largest share acquisitions. According to experts, the 16–18% CAGR of the Indian semiconductor market, as well as rising demand due to increased digital use brought on by the epidemic, are factors driving up investor interest in semiconductor manufacturing.
With a rising market in India, ISMC plans to produce chips with a 65 nanometer (nm) size, an older technology node with a variety of applications in the consumer electronics, automotive, and power device markets.
India’s aspirations in the semiconductor industry come amid geopolitical tensions between China and Taiwan, the country that is home to the largest contract chipmaker in the world, TSMC. Last week, businesspeople and government representatives from Taiwan visited India to strengthen cooperation in a number of industries, including semiconductors and electronics. The US government is also pressuring American companies to transfer contract manufacturing from China to locations like India. For instance, Apple dramatically increased domestic semiconductor production in India by moving iPhone assembly there.
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