Vedanta Foxconn , a joint venture between Anil Agarwal’s Vedanta and Taiwan’s Foxconn, is currently waiting for approval from the government and expects to kickstart the sale of its semiconductor chips in late 2027, David Reed, chief executive officer of the JV, in a conversation with DH’s Lavpreet Kaur said. Reed talked at length about the progress so far in what is touted to be India’s first semiconductor manufacturing unit in Dholera, Gujrat and also touched upon the shortfalls in India’s chipmaking endeavours and the opportunities.
What is the update on the chip plant coming up in Gujarat? Are you facing any issues with funding?
We have all that we need to start the factory and are waiting for government approval and the next step would be rewarding the contracts to suppliers. In parallel to that, we are aiming to hire 114 people by the end of this year. So, we are trying to locate the people and get everybody in place so when the government gives a go-ahead, and then the funding is released, we are good to go.
Once the contractor for the fab is selected, immediately there will be about 1500 people at the Dholera site and about 3500 people for construction that we have to bring in.
As far as the funding issues are concerned, everybody wants to check the boxes and make sure everything’s in place. We’ve gone through that process. We’ve submitted the paperwork and the application is in process right now and we expect it to be approved pretty soon.
We welcome the updated policy where the government will provide help in setting up the plant. In fact, we were excited about the micron announcement. I think opening the window is a very smart move as more players would want to come into India and an ecosystem can be developed. So now under the new policy, the new rules, even they can apply.
What will be the capacity of the plant and when do you plan to launch it?
This factory will have a production capacity of 40,000 wafers a month. The factory, from day zero, will be designed for 28-nanometre chips, but we will start with 40 nm chips. We’re targeting a first revenue wafer in 2027. We would start installing the equipment probably in the second half of 2026.
Do you plan to start exports immediately or is the focus only on the domestic market?
We will do both because the objective is to have a successful launch. I would call it a dual circulation strategy - one of the circulations of the strategy is the domestic market i.e. India, so you got just hundreds of startups here that want those products. We will also export chips. So if someone wants to build a chip here and sell it to United States or Germany or whoever, we will do that. The main thing is just to keep the factory full and profitable. And so if the domestic demand drops the export can fill it, and vice-versa. This factory will also supply our partner Foxconn.
Could you give us an estimate of what the investment for this plant looks like?
The latest estimate is around $8.6 billion. If you just took the equipment list, just the tools cost about $5.7 billion, the building is probably in the sights for another billion. And then there’s getting the people, building the infrastructure here in India which is going to take a tonne of money. That’s because there is no infrastructure here for semiconductor manufacturing. So not only do we have to build the factory, build the supply chain, logistics, transfer the flow and get it running, but we also have to work with 600-800 suppliers and convince them to come here. It all just snowballs. And so and this is why the government’s involvement in this is so helpful because what their investment does is lower the risk and entice more suppliers to come in and then it makes it more competitive versus someone that would do this 100% by themselves.
Do you see any major challenges tied to the semiconductor industry in India? What reforms in your opinion can help facilitate growth?
Besides infrastructure, another challenge that we’re facing is the social ecosystem. We’re hiring people from Korea, Japan, Taiwan, Singapore, Malaysia, Indonesia, US, Germany and England and we have to work with the central government and the regional governments to build infrastructure that is friendly to non-Indians, just what China and Taiwan did. It’s what China, Taiwan and Japan did when they started.
Another major concern is hiring experienced people and convincing them to come to India. We have tonnes of people in India but they have zero experience with manufacturing operations in semiconductors or building a wafer fab. So we need people that are experienced. What we will do is that the top layer is 100% experienced, the second layer is 50% experienced and the layer below that is 25% experienced. So 75% of the bottom is Indian base, the middle layer is 50% Indians and then the top layer is all expats depending on where we hire from. Eventually, this needs to be 100% Indian-driven.
Have we yet bounced back to normalcy from the supply chain issues caused by the pandemic and the war in Ukraine?
No, I don’t think in any sense the supply chain is back to where it was. The semiconductor revenue right now is about $600 billion and that’s going to be $1 trillion by 2030 so almost doubling and just the sheer amount of silicon that’s required is massive. The second thing going on, is customers want more sources of silicon other than the United States, Japan, Korea, China, they want backups. It went from ‘just in time’ to ‘just in case’ - a totally different mindset now. It’s an unraveling of 40 years of work.
And then you have India. In India having a huge 6% growth rate, the domestic demand alone for India doesn’t match any other country. So, I think this is India’s moment. It is an opportunity and it’s pointing in the right direction.