Recently, a news report from Foxconn shocked the industry: according to Foxconn's announcement, the group has withdrawn from its $19.5 billion semiconductor joint venture with Vedanta, India. The joint venture was established in February 2022 and was one of the early participants in India's semiconductor incentive measures.

In response to Foxconn's decision, Indian Minister of Electronics and Information Technology Rajeev Chandrasekhar stated that Foxconn's decision has "no impact" on India's plans, and added that both companies are "important investors" in the country. He also stated that the government has no authority to explore why or how the two private companies choose to cooperate or not.

In addition, Hon Hai Group (the parent company of Foxconn) is seeking another partner and plans to continue laying out Indian semiconductors. According to the Indian media The Economic Times, Hon Hai is negotiating with TSMC and Japan's TMH Group on the technology and joint venture cooperation for the establishment of semiconductor factories in India, and may soon finalize the details of cooperation between advanced and traditional process chips.

01

Indian Semiconductor Ambition

The Indian Ministry of Electronics and Information Technology predicts that the semiconductor market size in India will reach around 63 billion US dollars by 2026. Indian Prime Minister Modi has always regarded chip manufacturing as the top priority of Economy of India's economic strategy, and has made no secret that India's goal is to make it one of the three major partners in the global semiconductor supply chain.

From a practical perspective, although India is an international hub for chip design and has a large number of elite chip design talents, it lacks chip manufacturing factories and related intellectual property rights, and its semiconductor products are still highly dependent on imports.

India is deeply aware that relying solely on global supply chains in key areas such as semiconductor chips is not reliable. Its limited financial support and insufficient manufacturing capacity will seriously restrict the development of its Semiconductor industry.

In order to achieve the goal, India has launched a number of support policies to strengthen the development of Semiconductor industry, and hopes to encourage local and attract foreign enterprises to set up semiconductor factories in India and develop related industries.

In 2021, India plans to use 760 billion rupees (approximately 66013 million RMB) to create a semiconductor incentive plan that will provide "globally competitive" incentives for the semiconductor, display manufacturing, and design industries, ushering in a "new era" in India's electronic manufacturing industry. At the same time, the plan will promote the establishment of a complete semiconductor ecosystem, including design, manufacturing, packaging, and testing.

In the same year, India launched the "Indian Semiconductor Task" to coordinate the formulation and implementation of semiconductor industry policies at the national level.

At present, India's "group friends" include international friends such as Micron Technology, Applied Materials and Singapore Investment Group IGSS. Micron Technology Technologies plans to invest US $825 million in Gujarat, India, to build a new chip assembly and testing plant, which will be the company's first factory in India. The new factory will focus on the assembly and testing manufacturing of DRAM and NAND products to meet the needs of both domestic and international markets.

Applied Materials will invest US $400 million in India to set up a new R&D center. The company will invest $400 million in the next four years to establish a new engineering center near Bangalore, India. It may support planned investments of over $2 billion in the future and create 500 new senior engineering job opportunities.

02

All parties present their grand plans

Chips have penetrated into various industries and occupy a crucial position. Looking at the global chip war situation, the competition between the international Semiconductor industry is becoming increasingly fierce, and ensuring the industrial safety and stable development of the supply chain has become the goal of all parties.

In recent years, besides India, other countries such as the United States, the European Union, Japan, and South Korea have listed the chip industry as national strategic development goals and introduced supportive policies.

South Korea: Ensure to achieve a super gap in memory and Foundry model in the next 10 years

In the middle of March this year, South Korean President Yoon Suk Yeol said that he planned to invest 422 billion dollars in key areas such as chips and electric vehicles, including plans to establish a chip manufacturing center. On March 30th, the South Korean parliament passed the "Korean version of the Chip Act" - the "K-Chips Act", which stimulates investment by providing tax incentives to businesses to boost South Korea's domestic chip industry.

According to the amendment to the Special Tax Restrictions Act, South Korea will increase the tax credit for large companies investing in national strategic industries such as semiconductors, batteries, vaccines, and displays, from the current 8% to 15%; The tax credit for small and medium-sized enterprises will be increased from the current 16% to 25%.

In addition, in May this year, the Ministry of Science, Technology, Information and Communication of South Korea proposed in the 10-year blueprint for chip development that the goal of ensuring the realization of a super gap in semiconductor memory and Foundry model in the next 10 years and opening a new gap in the field of system semiconductors.

Japan: Domestic semiconductor production and sales reached 15 trillion yen by 2030

Japan has been striving for the goal of revitalizing the Semiconductor industry. On June 6 this year, Japan officially revised its "semiconductor and digital industry strategy". According to the revised strategy, the sales volume of semiconductors produced in Japan is required to reach 15 trillion yen ($108 billion) by 2030. This strategy aims to emphasize the core position of semiconductor chips in its Economic security policies.

TSMC, Rapidus and other chip manufacturers have previously stated that they will expand their chip production capacity in Japan.

EU: The proportion of chips in the world accounts for 20% before 2030

On July 13th of this year, the European Parliament passed the "Chip Act", with the goal of quadrupling chip production by 2030 and achieving a 20% global share of EU chips. It aims to significantly increase its supply of semiconductor products and reduce demand and dependence on the outside world.

At the same time, the EU has also invested an additional 3.3 billion euros in chip related research and development, and created a network of capability centers to address the EU's skill shortages and attract new research, design, and production talents.

In general, although the global Semiconductor industry is in a downward cycle, the global parties under the adverse wind are still pursuing their own goals, hoping to achieve their ambitions.

Japan said it planned to provide subsidies of up to 476 billion yen to support TSMC to build a new wafer foundry in Kumamoto Prefecture County, southern Japan; Provide 330 billion yen of financial support to Rapidus, which plans to mass produce specialized semiconductors for processes below 2 nanometers in 2027 for specific fields such as supercomputers, autonomous driving, artificial intelligence, and smart cities; Provide a subsidy of up to 92.9 billion yen to the NAND Flash factory, located in the triple city of central Japan, in collaboration with Western Data; Meanwhile, Japan also plans to provide up to 11.1 billion yen in financial subsidies to Canon's manufacturing equipment factories.