Now Foxconn hopes to lure TSMC, Japan’s TMH into India chip fab pact – report

Just days after its $19.5 billion semiconductor manufacturing venture with India's Vedanta went belly up, Foxconn is reportedly in talks with Taiwanese giant TSMC and Japan's TMH to build chip factories in India.

The proposed venture would see the creation of four or five manufacturing lines in the New Delhi country, the Economic Times reported Friday, citing the usual "people with knowledge of the development."

The two companies – TSMC and TMH – would bring extensive semiconductor fabrication and operational experience to the project, a talent that may have torpedoed Foxconn's now defunct joint venture with Indian mining and power generation company Vedanta.

TSMC is the world's largest contract manufacturer of semiconductors in the world, producing wafers for the likes of Apple, Qualcomm, AMD, Intel, and Nvidia to name but a few. Meanwhile, Japan's TMH has expertise in the operation and maintenance of wafer fabs.

According to the report, a lack of experience with chip production was one of several flags raised by India's Central Government with regard to the Vedanta venture. Prior to abandoning the deal this week, Foxconn was said to be in advanced talks with GlobalFoundries and STMicro to address these concerns.

It also appears that Foxconn may be angling to produce more advanced chips in India. While Vedanta plans to push ahead and license equipment for the production of mature 40nm and 28nm nodes from an unnamed Integrated Device Manufacturer (IDM), Foxconn reportedly aims to manufacture both advanced designs and legacy nodes, though details of this arrangement are far from final.

This is significant as the vast majority of chips produced using advanced process nodes — think headline grabbing CPUs, GPUs, and AI accelerators — are manufactured by TSMC and Samsung Electronics in Taiwan and South Korea. Intel also produces advanced process nodes in the US, but is still getting its Foundry Services chip building division off the ground. However, a substantial amount of chip demand is still for older process tech and not every integrated circuit needs newer nodes.

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Foxconn's enduring interest in semiconductor manufacturing is hardly surprising given the massive sums of capital, tax breaks, and other incentives available under the $10 billion Indian Semiconductor Mission laws passed in 2021.

As we previously reported, the Indian government offered Foxconn and Vedanta a slew of incentives to move the project along, including paying for 40 percent of capital expenditures, 50 percent of the cost of a desalination plant, subsidies toward electricity and water, cheap land, and reimbursements for stamp duties and registration fees.

Despite the Indian government bending over backward to attract chip manufacturers, Foxconn was one of the few to take the bait.

TSMC has instead focused its attention on expanding its Taiwanese presence and building out its US footprint. After initially announcing a $12 billion fab in Arizona in 2020, the company has expanded its US strategy to a pair of foundries with a price tag of more than $40 billion.

The foundry giant is also exploring a European expansion, potentially in collaboration with NXP Semiconductor, Bosch, and Infineon. So, a team up with Foxconn in India isn't entirely out of the question. ®