“Reliance recognizes the value of entering the semiconductor industry as it would provide a safeguard against chip shortages.”
Reliance Industries, led by billionaire Mukesh Ambani, has initiated an exploration into the realm of semiconductor manufacturing, a strategic move aimed at addressing its supply chain requirements and catering to the surging demand for chips in India. According to sources familiar with the company’s strategy, this conglomerate, active in telecommunications and energy sectors, has engaged in preliminary discussions with foreign chip manufacturers who could potentially become technology partners. One source, privy to the plans, stated, “There is intent, there is no timeline,” while emphasizing that Reliance has yet to make a final decision on investment.
The specific foreign chipmakers involved in the discussions remain undisclosed, as the sources were not authorized to speak with the media and chose to remain anonymous. Despite requests for comments, Reliance and Indian government offices have not provided any official responses.
Indian Prime Minister Narendra Modi has expressed ambitions for India to become a global chip manufacturer. However, these ambitions, initially laid out in 2021, have encountered setbacks. India currently lacks any chip manufacturing facilities, although both Vedanta in India and Taiwan’s Foxconn have expressed interest in establishing such plants.
Reliance perceives significant advantages in venturing into semiconductor production, as it would serve as a safeguard against potential chip shortages that could impact its telecommunications and electronic devices businesses. Notably, in 2021, Reliance delayed the launch of a low-cost smartphone developed in collaboration with Google, citing chip shortages.
The demand for semiconductors, both in India and worldwide, is on the rise. The Indian government has projected that the domestic chip market will reach a value of $80 billion by 2028, compared to its current worth of $23 billion.
With a market capitalization of approximately $200 billion, Reliance is well-positioned to venture into semiconductor manufacturing. According to Arun Mampazhy, a former India executive at the US-based chipmaker GlobalFoundries, “They also have deep pockets and know how to work with the government.” Nevertheless, chip manufacturing is an industry historically characterized by boom-and-bust cycles and demanding expertise. Mampazhy suggests that securing a tech partner, through a joint venture or technology transfer, is the pivotal factor for Reliance’s success in this endeavor.
Despite the Indian government offering $10 billion in incentives to promote chip production, there have been setbacks. A $19.5 billion joint venture between Vedanta and Foxconn collapsed, primarily due to difficulties in finding a suitable tech partner. This led Foxconn to decide to invest in India independently. Plans by ISMC, a collaboration between Next Orbit Ventures in Abu Dhabi and Israel’s Tower Semiconductor, to invest $3 billion in India faced delays when Intel sought to acquire Tower, and negotiations ultimately fell apart.
Furthermore, Reliance has been contemplating a $300 million investment that would grant the company a 30 percent stake in the venture for several months.