Semicon India: Foxconn is planning to partner with TSMC and TMH to set up chip fabrication units

After the closure of its joint venture with Vedanta, reports have now emerged that Foxconn is planning to set up several semiconductor foundries and fab units in partnership with Taiwan’s TSMC and Japan’s TMH. TSMC is the world’s largest chip maker

Foxconn is currently engaged in discussions with Taiwan Semiconductor Manufacturing Co or TSMC and Japan’s TMH Group for potential technology licensing and joint venture partnerships to establish semiconductor fabrication units in India, as per a repot by the Economic Times.

Earlier this week, Foxconn terminated its joint venture with India’s Vedanta Group for chip production. Sources revealed that Foxconn has been in talks with TSMC and TMH for quite some time now. It is expected that the details of the partnership, encompassing the manufacturing of advanced and legacy node chips, will be finalized soon.

Foxconn will get a lot from TSMC’s experience
TSMC is one of the world’s largest chip foundries, while TMH provides semiconductor solutions and handles the operation and maintenance of manufacturing equipment. Prior to partnering with Vedanta, Foxconn was in advanced discussions with STMicro, a European company, and US-based GlobalFoundries for a technology partnership.

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Another official mentioned that Foxconn could still potentially collaborate with STMicro or GlobalFoundries. The Indian government had requested Foxconn and Vedanta to include a technology partner due to their lack of expertise in semiconductor manufacturing. However, the government of India wanted that third party to be a partner in the JV with some stake, instead of Foxconn and Vedanta just licensing the tech.

In February 2022, Foxconn and Vedanta, led by Anil Agarwal, announced their joint venture to manufacture chips and display panels in India, positioning themselves as early participants in the ISM, which aims to enhance India’s domestic capabilities in the strategic semiconductor industry.

Foxconn’s Semicon India Dreams
Recently, it was reported that Foxconn plans to establish four to five semiconductor fabrication lines in India. The company has already informed the government about its intentions. In December 2021, the Indian government introduced a $10 billion semiconductor incentive program, offering a 50 per cent subsidy on capital expenditure to companies establishing chip manufacturing units in the country.

In addition, several state governments in India were prepared to provide further subsidies of 15-25 per cent to attract such projects under the India Semiconductor Mission (ISM), potentially covering up to three-fourths of the total project cost. A partnership with a semiconductor manufacturing technology provider is among the qualifying conditions for the incentives.

Foxconn’s second innings in Semicon India
To qualify for these incentives, Foxconn needs to collaborate with a semiconductor foundry and fabrication company, of which there are only a few worldwide. TSMC, responsible for over 50 per cent of global chip production, reported a 33.5 per cent increase in revenue to $75.88 billion in 2022 compared to the previous year.

The company aims to ship up to 17 million 12-inch equivalent wafers by the end of this year, compared to 15.3 million in the previous year. Foxconn announced on Tuesday that it is working towards submitting an application under the ISM and expressed its openness to collaborating with stakeholders in India and abroad who can complement its supply chain management and manufacturing efficiency.