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Foxconn in fresh talks with TSMC and TMH over new Indian chip fabs

Foxconn hopes to open between four and five semiconductor fabs throughout India once its partnership is confirmed.

By Ryan Morrison

Electronics manufacturer Foxconn is reportedly in talks with TSMC and TMH over a new technology partnership that could see them produce semiconductors in India. It follows the breakdown of discussions between Foxconn, which manufactures a wide range of leading devices including the iPhone, and India’s Vedanta Group earlier this week over a new Indian chip fab.

Foxconn says it is committed to opening semiconductor fabs in India despite the end of a deal with Vedanta (Photo:  AlmondYue / Shutterstock)
Foxconn says it is committed to opening semiconductor fabs in India despite the end of a deal with Vedanta (Photo:  AlmondYue / Shutterstock)

Conversations between Foxconn, TSMC, the world’s leading contract chip maker, and Japan’s TMH Group, which provides equipment for semiconductor fabs, have apparently been going on for some time. The deal is expected to see the manufacture of advanced and legacy node chips in India as part of plans for multiple foundries throughout the country.

The new Foxconn partnerships were first reported by India’s Economic Times, with a source suggesting it is likely to be finalised soon. There are only a handful of companies globally able to produce leading-edge semiconductors at scale and TSMC is the largest, producing half of all chips.

The Indian government has been working to attract its first semiconductor fab since December 2021, when it announced a $10bn incentive programme and 50% subsidy on capital expenditure for any company launching a fab in the country. Vedanta says it still expects to open the first semiconductor manufacturing facility in India, despite the end of its joint venture with Foxconn. It is now in talks with other partners.

The original Vedanta-Foxconn consortium was one of five groups hoping to get part of the $10bn package from the Indian government. Vedanta says it still intends to enter the semiconductor market this year and is working with currently unnamed partners. There is some suggestion this could be STMicro and GlobalFoundries.

Indian concerns over earlier Foxconn deal

Reports suggest a growing number of differences in approach had emerged between Foxconn and Vedanta, with the Indian government suggesting other potential partners would be more suitable. Speaking to the Economic Times, India’s minister for electronics and IT, Ashwini Vaishnaw said both companies were committed to developing the industry and this would have no impact on the mission.

The government expressed concerns over the partnership as neither company had prior semiconductor experience and so would need to source fab tech from a third party. There were also thought to be cultural differences between the pair.

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Foxconn, which first announced it planned to go into chip manufacturing itself in 2021, says it has kept the Indian government apprised of its renewed plans and partnerships with TMSC and TMH. The company says it is in talks with the government to resubmit its application under the semiconductor program.

It already has manufacturing capacity in India, producing phones for Apple and Xiaomi as well as electric vehicles. The company said after withdrawing from the Vedanta partnership: “It is challenging to build fabs from scratch in a new geography, but Foxconn is committed to invest in India.”

Read more: Can Japan rekindle its love affair with semiconductors?

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