India’s Semiconductor Ambitions Dwindle as Chip Consortium and Joint Venture Hit Roadblocks

India’s ambitious plans to establish a $3 billion semiconductor facility in collaboration with chip consortium ISMC, including Israeli chipmaker Tower, have been halted due to Intel’s ongoing takeover of Tower Semiconductor, according to three insider sources. Simultaneously, a separate $19.5 billion chip manufacturing project, a joint venture between India’s Vedanta and Taiwan’s Foxconn, is progressing slowly as negotiations with European chipmaker STMicroelectronics have reached a deadlock, revealed a fourth source familiar with the matter.

These obstacles pose significant setbacks for Prime Minister Narendra Modi, who has prioritized chip manufacturing as part of his plan to attract global companies and usher in a new era in electronics manufacturing. India anticipates its semiconductor market to reach $63 billion by 2026 and had received applications from Vedanta-Foxconn JV, ISMC consortium, and Singapore-based IGSS Ventures for setting up chip plants under a $10 billion incentive scheme.

Sources knowledgeable about ISMC’s strategy reported that the plans for the consortium’s $3 billion facility are currently on hold due to Tower Semiconductor’s review process following its acquisition by Intel. The Vedanta-Foxconn JV, set to establish a plant in Gujarat, is struggling to secure a technology partner, despite having involved STMicroelectronics for technology licensing. The Indian government’s request for STMicro to have a stake in the partnership has hindered progress, as the chipmaker prefers a more mature Indian market.

India, a late entrant to the chip manufacturing sector, aims to overcome the dominance of a few countries like Taiwan in global chip production. However, the current challenges faced by the chip consortium and joint venture are impeding India’s aspirations in the semiconductor industry.