The discussions between Vedanta-Foxconn semiconductor consortium and STMicroelectronics on its entry into the deal as a technology partner are stuck due to factors like technology transfer, duration of the partnership, and the funds to be invested by each company, The Economic Times reported on Thursday.
One of the primary obstacles is that STMicroelectronics wants to limit the scope of the technology transfer and also have a sunset clause regarding the duration of the joint venture, a source quoted in the report said.
“STMicroelectronics also has some reservations regarding its investment in the (Vedanta-Foxconn) combine. They want Vedanta to take the lead and invest more,” the person said.
A sunset clause, or a sunset provision, can be defined as a clause in a regulation or a contract that will automatically expire on a specific date. A good sunset clause example is if the sunset clause date is reached, the sunset clause will provide an automatic appeal of the entire law.
The report added that STMicroelectronics wants to exit the joint venture after 5 to 10 years. During that duration, it can complete technology transfer. But the Vedanta-Foxconn combine wants the European chipmaker to stay on for longer.
STMicroelectronics’ inclusion in the Vedanta-Foxconn chipmaking project as a technology partner is crucial as it would help the consortium qualify as a beneficiary of the Centre’s Rs 76,000 crore incentive plan.
Business Today has reported earlier that the India Semiconductor Mission is waiting for Vedanta-Foxconn JV to onboard a technology partner with a production-grade license to give the go-ahead for the next phase.
According to the government’s rule for the semiconductor incentive plan, applicants must showcase their expertise in the specialised domain of semiconductor manufacturing. To get government’s nod for the project, the interested parties must either possess a fabrication unit capable of producing semiconductor chips in the 65-28 nanometer (nm) range, or have "production-grade licensed technologies" to manufacture 28 nm chips.
Besides this, they must provide evidence of their capabilities in advanced node technologies through licensing or development, as outlined in the official guidelines.
Vedanta along with Foxconn revealed their intention to establish a semiconductor manufacturing facility in Gujarat. The Vedanta Foxconn joint venture had signed an agreement with the Gujarat government to invest Rs 1,54,000 crore to set up a semiconductor plant and had finalised Dholera Special Investment Region near Ahmedabad for setting up the factory.
During the India Today Conclave held in March, billionaire Anil Agarwal said that he is keen to make India a semiconductor hub, and promised to produce cheaper, quality and innovative semiconductors and displays in the next two and a half years.
Agarwal said that his company has signed a memorandum of association (MoUs) with 100 Japanese companies, which will help him achieve this dream. He further foresees over 700-800 companies associating with Vedanta.
Agarwal said this cluster of over 100 companies will help manufacture cheap and quality raw materials (semiconductors and display), which can be used in manufacturing electronics in India, which is not profitable today.
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