Eyeing A Platter Full Of Incentives, Reliance Mulls Semiconductor Manufacturing

The oil-to-telecom conglomerate, Reliance Industries (RIL), is reportedly exploring plans to venture into semiconductor manufacturing. 

A source told Reuters that RIL has already held early-stage talks with foreign chipmakers to scout technology partners. As per the report, the move could help the company address its supply chain issues related to sourcing semiconductors and fulfil the growing demand for such products in the country. 

“There is intent, there is no timeline… Reliance is yet to make a call on whether they want to ultimately invest,” a source reportedly said. 

People familiar with the matter said that the move to build a semiconductor plant could help it alleviate concerns of chip shortages, which form the backbone of its telecom and electronic devices businesses.

The report also claimed that Reliance has, for months, considered pumping in $300 Mn for a 30% stake in ISMC, a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor. Curiously, ISMC was also said to be mulling investing $3 Bn to set up a plant in the country but the plans slowed down after Tower reportedly initiated talks with Intel for a proposed acquisition. The talks have now failed to materialise. 

Reliance’s bid to set up a semiconductor plant has primarily been led by attractive benefits offered by the central government under the INR 76,000 Cr production-linked incentive (PLI) scheme. However, the path ahead seems to be full of hurdles. Firstly, India lacks infrastructure for manufacturing semiconductors and, as a result, finding a local technology partner for the same could prove to be a challenge. 

Even for conglomerates such as Vedanta, which have deep pockets, lack of experience has proved to be a major hurdle. It was this aspect that scuttled the $19.5 Bn joint venture between Vedanta and Foxconn to set up a semiconductor plant in the country. 

The challenges have still not stopped foreign players from making a beeline for the country. Just a day ago, it was reported that Foxconn had partnered with French-Italian semiconductor company STMicroelectronics to set up a semiconductor plant in India. 

Before this, US-based Micron also announced a $2.75 Bn investment in setting up a DRAM (dynamic random access memory) and NAND assembly, testing, marketing and packaging (ATMP) facility in India. This came right after Prime Minister Narendra Modi’s visit to the US in June this year. 

Right after this, Applied Materials also unveiled plans to pump in $400 Mn capital in the country over the next four years to set up a semiconductor facility. 

With an eye on PLI incentives and growing demand globally for semiconductors, the homegrown manufacturing ecosystem is well-poised for multifold growth on the back of the growing use of smartphones and EVs. As per a report, the Indian semiconductor market was estimated to be around $34.42 Bn at the outset of 2023 which is projected to soar to $126.9 Bn by 2029. 

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.