Foxconn Mulls Setting Up Two Fab Plants For Production Of Gallium Nitride And Silicon-Based Chips In India: Report

After walking out of a chipmaking joint venture with the Vendanta group, Taiwanese contract manufacturer Foxconn is reportedly considering setting up a chip manufacturing facility in India.

The company is planning to apply to the government to establish two fab plants on its own, Business Standard reported citing sources.

One of the fab plants that Foxconn intends to set up will be a compound semiconductor plant based on gallium nitride. This plant will produce chips widely used in power electronics, electric vehicles (two-wheelers), and telecom devices.

The other fab plant of the company will reportedly be based on silicon.

Foxconn aims to manufacture a range of chips, including 14, 28, and 40 nanometre chips from its facilities.

While the specific details have not been finalised, Foxconn may also bring in a Taiwanese fab company as a technology or joint venture partner.

In a surprise move, Foxconn issued a statement on Tuesday to clarify its withdrawal from the Vedanta joint venture and its future plans.

The statement suggests that both parties mutually agreed to part ways, without elaborating on the specific challenges faced.

Foxconn emphasised that this separation should not be viewed negatively. According to Foxconn, there was mutual recognition that the project was not progressing fast enough.

"There were challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project," the company said.

Foxconn's withdrawal from its joint venture with Vedanta to establish a $19.5-billion fab plant in Gujarat dealt a blow to the Centre's semiconductor ambitions.

While acknowledging the challenges of building fabs in a new location, Foxconn in its statement expressed its commitment to continue supporting "Make In India" initiative and establish local partnerships.

As part of its new plans, Foxconn is considering buying back the chips manufactured in India. The company currently purchases over $40 billion worth of chips annually for its electronics manufacturing requirements.

With its expansion into the electric vehicle industry, the demand for chips is expected to increase.

India is among the countries where Foxconn aims to establish an EV plant.

Fabs built on gallium require a lower investment, ranging from $80-100 million to up to $500 million, depending on the plant's specifications. They can also be commercially built much faster.

Some Indian companies are also interested in entering this market, which has a wide potential customer base.

In its statement, Foxconn Hon Hai Technology group confirmed the move to set up a fab plant.

“Foxconn is working toward submitting an application related to the modified program for semiconductors and display fab ecosystem," it said.

Foxconn is currently evaluating potential partners to collaborate with for its future plans in India and abroad.

The Taiwanese manufacturing giant intends to submit a proposal to be eligible for the government's semiconductor incentive scheme. This scheme offers up to 50 per cent incentive on the project cost and has recently been opened up to newer players.

The deadline for eligibility for the scheme has been extended until December of next year.