Home NEWS Exclusive: India’s Reliance explores chipmaking foray, talking with potential partners

Exclusive: India’s Reliance explores chipmaking foray, talking with potential partners

The logo of Reliance Industries is pictured in a stall at the Vibrant Gujarat Global Trade Show at Gandhinagar

The logo of Reliance Industries is pictured in a stall at the Vibrant Gujarat Global Trade Show at Gandhinagar, India, January 17, 2019. REUTERS/Amit Dave/File photo Acquire Licensing Rights

NEW DELHI, Sept 8 (Reuters) – Billionaire Mukesh Ambani’s Reliance Industries (RELI.NS) 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, two people familiar with its strategy said.

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, said one of the people who has direct knowledge of the plans.

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

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

The sources were not authorised to speak to media and declined to be identified. Reliance, whose interest in making semiconductors has not been previously reported, did not respond to repeated requests for comment.

India’s IT ministry and Prime Minister Narendra Modi’s office also did not respond to requests for comment.

Modi has declared he wants his country to become a chipmaker for the world but those ambitions, first laid out in 2021, have suffered setbacks. The country does not as yet have any chip manufacturing plants, although India’s Vedanta (VDAN.NS) and Taiwan’s Foxconn (2317.TW) 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, the sources said. 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, said Arun Mampazhy, a former India executive at U.S.-based chipmaker GlobalFoundries.

“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 (TSEM.TA)to invest $3 billion in India, have moved slowly after Intel (INTC.O) 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, a third source with direct knowledge of discussions said.

Next Orbit Ventures and Tower did not respond to requests for comment.

Reporting by Munsif Vengattil and Aditya Kalra; Editing by Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

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Munsif Vengattil is a Reuters’ India technology correspondent, based in New Delhi. He tracks how policymaking is influencing the business of tech in India, and how the country is now vying more aggressively to be a powerhouse in the global electronics supply chain. He also regularly reports on big tech giants, including Facebook and Google, and their strategies and challenges in the key Indian market.

Aditya Kalra is the Company News Editor for Reuters in India, overseeing business coverage and reporting stories on some of the world’s biggest companies. He joined Reuters in 2008 and has in recent years written stories on challenges and strategies of a wide array of companies — from Amazon, Google and Walmart to Xiaomi, Starbucks and Reliance. He also extensively works on deeply-reported and investigative business stories.

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