Billionaire Mukesh Ambani’s Reliance Industries has begun exploring a foray into semiconductor manufacturing, two people familiar with the matter said, a move that could meet its supply chain needs and meet India’s growing demand. chip requirements.
Encouraged by the Indian government, the telecom-energy group has held early talks with foreign chipmakers as potential technology partners, a person with direct knowledge of the plans said.
“There is an intention, but there is no timetable,” the person said, adding that Reliance “has not yet decided whether it will ultimately invest.”
The name of the foreign chipmaker was not immediately available.
The sources were not authorized to speak to the media and declined to be named. Reliance’s interest in making semiconductors has not been previously reported, and the company did not respond to repeated requests for comment.
India’s Information Technology Ministry and Prime Minister Narendra Modi’s office also did not respond to requests for comment.
Modi has declared that he wants India to become the world’s chipmaker, but those ambitions, first laid out in 2021, have met with setbacks. The country does not yet have any chip manufacturing plants, although India’s Vedanta and Taiwan’s Foxconn are both considering building factories.
Reliance sees merit in getting into semiconductors as it would help guard against chip shortages that could affect its telecom and electronic equipment businesses, the sources said. In 2021, for example, the group delayed the launch of a low-cost smartphone it was developing with Google, citing a shortage of chips.
Demand for semiconductors is also increasing in India and globally, they point out. The Indian government forecasts that the domestic chip market will be worth $80 billion (nearly Rs 6,642 billion) by 2028, from its current value of $23 billion (nearly Rs 19,096 crore).
Arun Mampazhy, a former India executive at US chipmaker GlobalFoundries, said Reliance, with a market capitalization of about $200 billion (nearly Rs 1,660.53 crore), would be one of the best-suited companies in India to dive into semiconductors. .
“They also have deep pockets and know how to work with the government,” he said.
But the chipmaking industry has historically been plagued by boom and bust cycles and requires a lot of expertise.
“For Reliance, acquiring a technology partner either through a joint venture or through a technology transfer is make-or-break,” Mampazhy said.
India’s chip ambitions have suffered a setback despite government incentives of $10 billion (nearly Rs 8,303 crore).
A $19.5 billion (nearly Rs 161,930 crore) joint venture between Vedanta and Foxconn collapsed before it launched in July as both parties struggled to find a technology partner and Foxconn complained the project wasn’t moving fast enough.
Foxconn has since decided to invest in India without Vedanta.
ISMC, a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, plans to invest $3 billion (nearly Rs 2,490 crore) in India, but progress has been slow after Intel sought to acquire Tower. Talks between Intel and Thar later broke down.
A third source with direct knowledge of the discussions said Reliance had been considering investing $300 million (nearly Rs 2,490 crore) for a 30% stake in the venture for several months.
Next Orbit Ventures and Tower did not respond to requests for comment.
© Thomson Reuters 2023
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