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Reliance Industries explores entry into Semiconductor Manufacturing
Industry News- Sep 12,23
At present, the names of the foreign chip manufacturers involved in these discussions remain undisclosed. The decision to invest in semiconductor manufacturing has not been finalised.
Reliance Industries, led by billionaire Mukesh Ambani, is reportedly exploring the possibility of entering the semiconductor manufacturing industry. This strategic move aims to address the company's supply chain needs and meet the increasing demand for chips in India. Two individuals familiar with Reliance's plans have shared this information.
The diversified conglomerate, known for its involvement in telecommunications and energy, has engaged in initial discussions with foreign chip manufacturers, potentially seeking technology partnerships. One of the sources with direct knowledge of these plans mentioned that there is a clear intent, but no specific timeline has been set. The decision to invest in semiconductor manufacturing has not been finalised.
At present, the names of the foreign chip manufacturers involved in these discussions remain undisclosed. It's worth noting that the sources providing this information have chosen to remain anonymous as they are not authorised to speak to the media. Reliance has also refrained from commenting on this matter, despite repeated requests for clarification.
The Indian government, under Prime Minister Narendra Modi's leadership, has expressed a desire to position India as a global chip manufacturer. However, these ambitions, initially outlined in 2021, have faced challenges. India currently lacks semiconductor manufacturing facilities, although companies like Vedanta and Foxconn have expressed interest in establishing such plants.
Reliance sees several advantages in venturing into semiconductor production, primarily in safeguarding against potential chip shortages that could impact its telecom and electronic device businesses. In 2021, the company had to delay the launch of a budget smartphone developed in collaboration with Google due to chip supply constraints. Additionally, there is a growing demand for semiconductors both in India and worldwide, with the Indian government projecting the domestic chip market to reach $80 billion by 2028, up from $23 billion at present.
With a market capitalisation of approximately $200 billion, Reliance is well-positioned to enter the semiconductor industry. According to Arun Mampazhy, a former executive of US-based chipmaker GlobalFoundries, Reliance's deep pockets and experience in working with the government give it a competitive edge. However, chip manufacturing is known for its cyclical nature and technical complexity, making it crucial for Reliance to secure a suitable technology partner through joint ventures or technology transfer.
Despite the Indian government offering $10 billion in incentives to promote chip manufacturing, several ventures have faced setbacks. The $19.5 billion partnership between Vedanta and Foxconn, for instance, collapsed due to difficulties in finding a suitable technology partner. Foxconn subsequently decided to invest in India independently. Similarly, ISMC, collaboration between Next Orbit Ventures and Tower Semiconductor, faced delays after Intel expressed interest in acquiring Tower, leading to failed negotiations. Reliance has been contemplating a $300 million investment to acquire a 30% stake in this venture, as confirmed by a source with direct knowledge of the discussions. Requests for comments from Next Orbit Ventures and Tower Semiconductor have gone unanswered.
Reliance Industries
Semiconductor Manufacturing
Chip Demand
India
Technology Partners
Supply Chain
Mukesh Ambani
Telecom
Electronics
Chip Shortages
Investment Plans
Vedanta
Foxconn
Technology Partnership
Arun Mampazhy
Chip Manufacturing
ISMC
Next Orbit Ventures
Tower Semiconductor
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