Foxconn Seeks to Work With STMicro to Build India Chip Plant

Foxconn Technology Group is teaming up with STMicroelectronics NV for a bid to build a semiconductor factory in India, seeking state backing to broaden its footprint in the South Asian country.

Taiwan’s Foxconn and Franco-Italian STMicro are applying for state support for a 40-nanometer chip plant, people familiar with the matter said, asking not to be identified as the plan isn’t public. Such mature chips are used in cars, cameras, printers and a wide variety of other machines.

The move comes after Foxconn’s attempted partnership with billionaire Anil Agarwal’s Vedanta Resources Ltd. fell apart after a year of little progress. By partnering with STMicro, contract manufacturer Foxconn is tapping the expertise of a chip-industry pioneer to expand in the lucrative but difficult semiconductor business.

The failure of Foxconn’s previous attempt with metals company Vedanta underscores how difficult it is to set up new semiconductor plants, massive complexes that cost billions of dollars to build and require very specialized expertise to run. Neither Foxconn or Vedanta have previous significant experience in chipmaking and their joint venture was thwarted by delays in finding a partner with production-ready chip technology and obtaining approvals for state subsidies.

New Delhi has asked Foxconn, best known as Apple Inc.’s key assembly partner, for more details about its partnership with STMicro, the people said. Foxconn is also in talks with a few other companies that have chip-making technology, one of the people said.

India’s technology ministry didn’t respond to a request for comment. Foxconn and STMicro spokespersons declined to comment.

India, like countries including the US, is trying to boost chip output to reduce reliance on expensive imports and dependence on Taiwan and China. Prime Minister Narendra Modi has pledged $10 billion to woo chipmakers, promising his administration will bear half the cost of setting up semiconductor sites. That effort has prompted US memory chip firm Micron Technology Inc. to announce a $2.75 billion assembly and testing facility in Modi’s home state of Gujarat.

Any chip project, including Foxconn’s, will have to make detailed disclosures including whether it has firm, binding agreements with a technology partner for production, as well as financing plans comprising equity and debt arrangements. The applicants also need to disclose the type of semiconductors they’ll make and their target customers.

Other chip-related firms moving into India include Advanced Micro Devices Inc. and equipment maker Applied Materials Inc., which plan to spend $400 million each on R&D and engineering centers in the southern tech hub of Bengaluru.