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RIL in talks with potential partners to explore chipmaking foray: Report

RIL in talks with potential partners to explore chipmaking foray: Report

Reliance sees merit in getting into semiconductors as the move would help safeguard against chip shortages that could affect its telecom and electronic devices businesses, said the report

RIL in talks with potential partners to explore chipmaking foray: Report RIL in talks with potential partners to explore chipmaking foray: Report
SUMMARY
  • RIL has held early-stage talks with foreign chipmakers that have the potential to become technology partners, said a report
  • Indian govt has forecast the domestic chip market will be worth $80 bn by 2028
  • A $19.5-bn venture between Vedanta and Foxconn collapsed in July even before it got off the ground

Billionaire Mukesh Ambani's Reliance Industries Ltd has begun exploring a foray into semiconductor manufacturing, a move that could address its supply chain needs and cater to growing chip demand in India, said a report on Friday.

The telecoms-to-energy conglomerate, encouraged by the Indian government, has held early-stage talks with foreign chipmakers that have the potential to become technology partners, reported Reuters quoting a source.

"There is intent, there is no timeline," the source said, adding that Reliance is "yet to make a call on whether they want to ultimately invest".

The names of the foreign chipmakers could not be immediately learned by Reuters.

RIL, IT Ministry and PMO haven't responded to requests for comment, the report said.

Modi has declared he wants India to become a chipmaker for the world but those ambitions, first laid out in 2021, have suffered setbacks. India does not as yet have any chip manufacturing plants, although India's Vedanta and Taiwan's Foxconn are both looking at building facilities.

Reliance sees merit in getting into semiconductors as the move would help safeguard against chip shortages that could affect its telecom and electronic devices businesses, sources told Reuters. In 2021, for example, the conglomerate delayed the launch of a low-cost smartphone it was developing with Google GOOGL.O citing the chip shortage.

Demand for semiconductors in India and globally is also increasing, they noted. India's government has forecast the domestic chip market will be worth $80 billion by 2028 compared with $23 billion currently.

Reliance, which has a market capitalisation of around $200 billion, would be one the best-positioned companies in India to delve into semiconductors, Arun Mampazhy, a former India executive at US-based chipmaker GlobalFoundries told Reuters.

"They also have deep pockets and know how to work with the government," he said.

But chip manufacturing is an industry that has historically been beset with boom and bust cycles and requires much expertise.

"Getting a tech partner – as a joint venture, or via transfer of technology, is the make or break point" for Reliance, said Mampazhy.

Setbacks for India's chip ambitions have come despite the government's offer of $10 billion in incentives.

A $19.5 billion venture between Vedanta and Foxconn collapsed in July even before it got off the ground as the two sides struggled to find a tech partner, with Foxconn complaining that the project had not moved fast enough.

Foxconn has since decided to invest in India without Vedanta.

Plans by ISMC, a venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor, to invest $3 billion in India, have moved slowly after Intel sought to acquire Tower. Talks between Intel and Tower later collapsed.

Reliance has for months been considering an investment of $300 million that would give it a 30% stake in the venture, the report said.

Published on: Sep 08, 2023, 2:43 PM IST
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Reliance Industries Ltd
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