Reliance Said to Be Exploring Foray Into Chip Manufacturing; in Talks With Potential Partners

Reliance sees merit in getting into semiconductors as the move would help safeguard against chip shortages.

By Reuters | Updated: 8 September 2023 16:06 IST

Reliance Said to Be Exploring Foray Into Chip Manufacturing; in Talks With Potential Partners

Demand for semiconductors in India and globally is also increasing

Highlights

The names of the foreign chipmakers could not be immediately learned
In 2021, Reliance delayed launch of low-cost phone citing chip shortage
Reliance has a market capitalisation of around $200 billion

Billionaire Mukesh Ambani's Reliance Industries 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 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, the sources said. In 2021, for example, the conglomerate delayed the launch of a low-cost smartphone it was developing with Google 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 (nearly Rs. 6,64,200 crore) by 2028 compared with $23 billion (nearly Rs. 1,90,960 crore) currently.

Reliance, which has a market capitalisation of around $200 billion (nearly Rs. 16,60,530 crore), would be one the best-positioned companies in India to delve into semiconductors, said Arun Mampazhy, a former India executive at US-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 (nearly Rs. 83,030 crore) in incentives.

A $19.5 billion (nearly Rs. 1,61,930 crore) 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 (nearly Rs. 24,900 crore) 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 (nearly Rs. 2,490 crore) that would give it a 30 percent 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.

Is the Samsung Galaxy Z Flip 5 the best foldable phone you can buy in India right now? We discuss the company's new clamshell-style foldable handset on the latest episode of Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.