Vedanta Group plans second chip plant after Gujarat unit

Oil-to-metal conglomerate Vedanta Ltd proposes to further strengthen its diversification drive by putting up a second semiconductor and display plant in country.  

Speaking to Mint, Vedanta Resources Ltd.‘s chairman Anil Agrawal said that India would need at least couple of factories for becoming a hub of chip manufacturing and meeting the needs of country as well as the world.  

There are some things interesting  proposals from states such as Andhra Pradesh, Maharashtra that we will look for our second plant after starting operations from first unit in Gujarat, Agrawal said adding that ground breaking for the Gujarat facility may be completed by year end while production will start by 2024.  

Vedanta Ltd. on Tuesday announced its $ 20 billion (₹1.54 lakh crore) investment plan to set up a semiconductor chip and display manufacturing unit Gujarat in just about six months from first indicating its interest in finding suitable location to house this state-of-the-art manufacturing plant. As per the investment plan,  

Vedanta Displays Limited will setup a Display Fab Unit at Gujarat with investment of ₹94,500 crore and Vedanta Semiconductors Limited will setup an integrated Semiconductor Fab Unit and OSAT facility at Gujarat with investment of ₹60,000 crore.  

The location of the new facility, which is around 400 acres, is close to the capital city of Ahmedabad that will also make it easier get the right talent required for this specialised production facility. The two MoUs, together, will bring investment of more than ₹1.54 lakh crore and proposes to generate around 1 lakh new employment opportunities in the state. 

The proposed investment, by the Vedanta and Foxconn Group, for setting up of India’s first display manufacturing fab unit and an Integrated Semiconductor fab unit with OSAT facility will further support the development of upstream and downstream electronics manufacturing clusters and establishing of healthy trade linkages, Agrawal said.  

The Vedanta and Foxconn Group will work closely with the state government to establish high-tech clusters with requisite infrastructure, including land, semiconductor grade water, high quality power, logistics, and a skill ecosystem. 

In addition to making India a global partner in the supply chain, the semiconductor fab unit will prove to be a game-changer for the economy. It will create significant employment opportunities for the youth and generate revenue for the state, Vedanta chairman said.  

Agrawal said that company’s manufacturing unit will be a raw material supplier to the entire chain of industries be it electric vehicles, automobiles, cell phones, lap tops etc. and will thus promote manufacturing in the country help its grow to becoming and electronic giant globally.  

“The Gujarat facility will also provide opportunities to start ups, other industries to put up their own operations and help the location become India’s own Silicon Valley much bigger in size than the 100 mile off big valley in the US,” Agrawal said.  

He added, the company will also promote development up industrial clusters based around its chip making unit and in this regard talks have already been initiated with state governments of Uttar Pradesh, Bihar, Maharashtra, Andhra Pradesh.  

Agrawal said that such is the interest among investors in company’s project that a lot of them have indicated their preference to join the initiative. “The partners are arranging funds internally for the project initially and needy it would be roped in at a later stage,” Vedanta chairman said.  

The proposed semiconductor manufacturing fab unit will operate on the 28nm technology nodes with wafer size 300mm; and the display manufacturing unit will produce Generation 8 displays catering to small, medium and large applications. 

India has taken several key initiatives to reduce dependence of imports of electronic goods by giving impetus to domestic manufacturing of electronic, semiconductor products and components. To position India as the global hub for Electronics System Design and Manufacturing, the Union government has notified four schemes for the development of sustainable semiconductor and Display ecosystem, OSAT/ATMP in the country with an outlay of ₹76,000 crore; India Semiconductor Mission (ISM), has been established under the Ministry of Electronics & Information Technology (MeitY) for this strategic sector having implications upon national security and economic sovereignty.  

The Vedanta and Foxconn Group has entered into two Memorandums of Understanding with the Government of Gujarat on Tuesday, in presence of Chief Minister of Gujarat Bhupendrabhai Patel and Union Minister for Electronics and Information Technology Ashwini Vaishnaw. The Minister for Education, Science and Technology for the Government of Gujarat Jitubhai Vaghani was also present on the occasion.  

At the MoU exchange ceremony, Brain Ho from Foxconn said that this decision of finalizing Gujarat for the prospective Semiconductor & Display fab units, was a culmination of extensive analysis of possible project sites in India and across the world, over a multiplicity of factors by sectoral experts.  

Agrawal said that Gujarat has had a long history of having an investor-friendly atmosphere and a robust manufacturing base. Additionally, the recent notified semiconductor policy with excellent incentives on capital expenditure, land, water and power has made Gujarat a very compelling choice for his company huge foray into the semiconductor manufacturing sector. 

Gujarat is known for a policy driven approach to develop conducive business ecosystem. In line with the above initiatives of the Government of India, the Government of Gujarat has recently notified the Semiconductor Policy (2022-27) to attract investment in the semiconductor chip manufacturing sector. With the announcement of this policy, Gujarat has become the first and only state to announce a dedicated policy to support the semiconductor and display manufacturing sector. The semiconductor policy provides fiscal and non-fiscal incentives for investors, besides ease of doing business in the state. Gujarat is offering electricity at ₹3 per unit for the new facility. 

Vedanta Limited is a vastly diversified Indian multinational company which has prominent presence in the power generation, mining, oil & gas sectors. It has a revenue of over $20 Billion. Vedanta operates across India, South Africa, Liberia and Namibia and has a presence in electronics and technology business through group companies Avanstrate Inc. and Sterlite Technologies. 

Hon Hai Technology Group, also known as Foxconn internationally, is a Taiwanese multinational electronics manufacturer ranked 22nd in the 2021 Fortune Global 500. It has broad semiconductor manufacturing expertise starting from equipment, wafer fab, OSAT, design service, and IC design and finished product assembly service. It has presence in 24 countries around the globe, including in India and one of the largest electronics manufacturers.