Vedanta makes a great $15-bn chip bet

The investment will be done in a phased manner and will include an integrated display fabrication facility and a separate semiconductor plant, Akash Hebbar, managing director of Avanstrat Inc., said in an interview. Integrated fabs cover almost the entire manufacturing process of a chip and involve two or three factories that take a “sands-to-brand” approach towards manufacturing semiconductors.

The proposal comes after the government on December 16 unveiled a $10 billion stimulus plan to encourage companies to make semiconductors and display fab. While the modalities of the scheme are still being worked out, the government plans to provide financial assistance of up to 50% of the project cost to eligible companies.

Avanstrat will start with Assembly, Test, Marking and Packaging (ATMP) and Outsourced Semiconductor Testing (OSAT) units and later build the complete fab. In the first phase, the firm will invest $5-10 billion, taking advantage of the government’s production-linked incentive (PLI) scheme for semiconductor manufacturing, Hebber said.

The Vanstrat will start with the Integrated Display Fab which will be built in four phases, while the semiconductor plant will be built in two phases. In the first phase, the company will target a capacity of 60,000 panel sheets and 10 million displays. Display panels are cut from large glass sheets called panel sheets.

“In fact, we should come up with big panel fabs and semiconductor fabs by 2025-26. Small factories like OSAT may come by the end of 2024.” “This is phase 1. Phase 2 is likely to start around eight to nine years later,” he said.

Avanstrat is in talks with various states having experience in electronics manufacturing including Gujarat, Tamil Nadu, Maharashtra and Haryana. These provide incentives over and above the schemes of the central government. Hebbar said proximity to ports and railways would be important considerations for setting up units. “It is an early stage. We want them to come up with the best proposal.” He added that the initial talks were encouraging and a substantial package is expected.

Certainly, Vedanta is not the only company talking to these states. In November, Reuters reported that the Tata Group was in talks with Tamil Nadu, Karnataka and Telangana to set up an OSAT plant. Tata Group Chairman N. “At the Tata Group, we have already entered into many new businesses such as electronics manufacturing, 5G network equipment and semiconductors,” Chandrasekaran said at an industry event in August.

In addition, companies in India have unsuccessfully attempted to build a semiconductor manufacturing base in the past. For example, the Vedanta group was reportedly making a 6,000 crore investment for an LCD manufacturing unit in Noida in 2018. Similarly, Reliance Group and Videocon were also looking at setting up fab units, according to several reports citing unidentified people.

That said, the current PLI scheme is at least the third time the country is trying to attract chip firms. The government said last week that it was worth investing in 1.70 trillion is expected for more than 20 units, including two chip makers and two display makers that will install units over the next four years. “Many companies had a very outlandish look at this whole thing. They were looking at India and looking at the states in terms of whether there’s water and electricity ready. We’re getting a lot of traction in places where They are talking about high fidelity, subsidized rates for electricity, proximity to ports and water bodies, which will provide us 24×7 water infrastructure, in a very clean and economical manner,” he emphasized.

Hebbar said the glass and processor fab will bring 50% of the value chain in India. The company is in talks with its partners in Taiwan and Korea. “It is imperative that the companies supplying us are co-located, which will attract the entire industry,” he said.

Hebbar said around 75 per cent of the initial demand is expected to come from here. For example, glass will be used by many other industries including automotive, television, mobile phones and the military. On the other hand, semiconductor chips in the 28nm-65nm nodes will be used in low-end smartphones and feature phones as well as devices, CCTV cameras and more. “We are targeting the consumer segment, but the applications of these chips can be diverse,” he said.

Nodes refer to the technology node, also known as the process node, which is used to build the chip. This size determines the efficiency of a chip and the amount of power it generates. The most advanced chips used by Apple, Samsung and other companies in their high-end phones today are built on 5nm nodes by companies such as Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Semiconductors.

“You will see the US is putting in $50 billion, Europe $42 billion, but all these are in the latest 7nm, 9nm chips, which India doesn’t need,” Hebbar said.