Vedanta looking to raise $3B to become India's first chipmaker
Vedanta is leaving no stones unturned as it pushes to become India's first chipmaker. The company is now in talks with banks to raise $2.5-$3 billion to boost its semiconductor and display manufacturing plans. The oil-to-metal conglomerate formed a joint venture with Taiwan's Foxconn in February to enter chip manufacturing. The company is also seeking incentives from both central and state governments.
Why does this story matter?
India has big aspirations to become a manufacturing hub. Being a manufacturing hub in the 21st century means an unobstructed supply of semiconductors. By 2026, the Indian semiconductor market is estimated to be worth $63 billion. As the country tries to establish itself as a key player in the chip market controlled by Taiwan and China, Vedanta's push has both financial and political ramifications.
Total planned investment outlay for the plant is $20 billion
Vedanta has decided to enter chip manufacturing in partnership with Foxconn, with a planned initial investment of $20 billion. The semiconductor plant is expected to start operations in 2025. The $3 billion debt the company is looking for will come into play once definitive agreements regarding subsidies from the government are reached. The company aims for 10-15% return from the plant over 15-20 years.
Vedanta seeks free land, cheap water, cheap power
Vedanta is in talks with state governments about several incentives. It is seeking 1,000 acres of free land and cheap water as well as power. It is in advanced talks with Gujarat, Maharashtra, and Telangana for selecting a site for the plant. Karnataka and Odisha are the other states in the fray. It is also seeking subsidies from the central government.
India should become a key player in chip market: Modi
The international chip market is dominated by manufacturers from countries like Taiwan and China. As the global semiconductor crisis continues, India is looking to create its own source. At the Semicon India 2022 Conference in Bengaluru, PM Narendra Modi talked about his desire to develop India as a key player in the global chip market. The conference was attended by several tech giants.Share this timeline