IGSS ropes in lead investor in fab play to meet new conditions

Singapore-based IGSS Ventures, a tech investment company, is tweaking its earlier proposal to set up a semiconductor fab plant in India by bringing a major global semiconductor company on board as a lead investor in the consortium.

The decision is in response to advice from the India Semiconductor Mission (which scrutinises such proposals) that it should rope in a large anchor investor if it wants its proposal is to be considered.

The ISM is examining the three applicants who want to set up a fab plant under the government’s $10 billion financial incentive scheme for such plants.   

Raj Kumar, founder and CEO of IGSS Ventures, explained the change in strategy: “While we have three investors who have committed equity funds, including a multi-billion dollar entity, it will be good to obtain another major semiconductor as the lead investor and that is what we are working on now,” said Kumar.

He added that the consortium will continue to work to “strengthen and differentiate’ itself while the government and the ISM ‘become clearer on the facts of what is required to make its proposal successful’.   

The ISM has given similar advice to the third applicant, the Next Orbit Ventures-led consortium, the ISMC. As a result, Next Orbit Ventures, a financial investor-run equity fund, has decided to sell its entire stake in ISMC to the Delhi-based B C Jindal group.  

The third applicant is Vedanta-Foxconn which is expected to be given a conditional clearance with riders attached, such as having to sign a binding agreement with its technology partners within a stipulated time.

The ISM told IGSS that the government will open up a window to allow it to rework its application to make it fit the requirements. The two key areas of concern were that the applicant should have a lead investor with deep pockets who can finance and execute the project.

The second was to ensure that an applicant has signed up with a technology partner.

However, the government is now looking at changing the scheme. It may allow applicants to set up a fab plant on tap, rather than go for a fresh round of invitation for companies to set up a fab plant and then give them only 45 days to submit their detailed proposal, as the government did at the outset.

Under this policy change, even existing applicants such as IGSS and ISMC would get the same window of opportunity.   

IGSS executives say that the consortium’s partners have three decades of foundry and technology expertise under their belt, one of which as an R&D plant for making 65 nanometre chips. Further, they have communicated to the government that they will bring 100-150 fab experts to India.

“We have given the government two Letters of Intent  from two  established integrated  device manufacturers,” said Kumar

He also justified why the consortium is not going to manufacture 28 nanometre chips (unlike the Vedanta-Foxconn proposal). He says the reason is that the foreign technology partners who have the expertise for this will charge an exorbitant fee for licensing which will adversely affect the competitiveness of the project.

Compared to the $10 billion investment which is required for the Vedanta-Foxconn plant, IGSS calculates that its project cost will be less than $4 billion.

IGSS ropes in lead investor in fab play to meet new conditions 

·     IGSS becomes second applicant to rework its application to set up a fab plant.

·     It can do so under the proposed new tweak in the scheme by re-submitting its proposal, this time  without a time deadline.

·     IGSS has communicated it will get 100-150 fab experts from the world to India.

·     It says it has 30 years’ expertise and technological expertise to set up foundries.

·     It has a LoI from two IDMs for technology.     

·     Plans to manufacture chips of 65 nanometres; it believes licensing technology of 28 nanometres is very expensive and might make the project unviable.