Reliance Industries is considering to enter the semiconductor manufacturing industry. It’s a move to meet its supply chain needs and meet India’s rising demand for semiconductors. According to sources, the company began discussions with global chipmakers regarding partnerships.

All You Need to Know about Reliance and NVIDIA Partnership

While the intention is clear, no specific timeline has been set, and Reliance has not made a definitive commitment to invest. The names of the foreign chipmakers involved in these discussions are not disclosed.

These sources, who requested anonymity, are not authorized to speak to the media. Reliance, whose interest in semiconductor production has not been previously reported, has not provided an official statement in response to inquiries. India’s IT ministry and Prime Minister Narendra Modi’s office also didn’t comment on the matter.

Prime Minister Modi has expressed his vision for India to emerge as a global chipmaker, a goal initially articulated in 2021. However, progress toward this vision has encountered challenges. As of now, India lacks semiconductor manufacturing plants, although both Vedanta from India and Foxconn from Taiwan are considering building facilities.

Reliance Industries sees significant merit in venturing into semiconductor production to mitigate the risk of chip shortages affecting its telecom and electronic devices businesses. In 2021, the conglomerate experienced delays in launching a budget-friendly smartphone it was developing with Google due to chip shortages.

The demand for semiconductors in India and worldwide is on the rise, with India’s government forecasting the domestic chip market to reach $80 billion by 2028, compared to the current $23 billion.

Reliance has a market value of almost $200 billion and is well-positioned to move forward with semiconductor manufacturing. According to Arun Mampazhy, a former India executive of US-based chipmaker GlobalFoundries, Reliance is a formidable contender in this field, However, the semiconductor manufacturing industry has historically gone through boom-and-bust cycles, requiring specialized skills.

However, the semiconductor manufacturing industry has historically experienced boom-and-bust cycles and requires specialized knowledge. Mampazhy highlights that finding a suitable technology partner, either by a joint venture or technology transfer, is going to be critical to helping Reliance in this.

India has given $10 billion in incentives to support its chip manufacturing ambition. Nevertheless, challenges persist, exemplified by the collapse of a $19.5 billion venture between Vedanta and Foxconn in July. The two entities struggled to find a suitable tech partner, with Foxconn citing slow progress as a concern.

Reliance has been contemplating an investment of $300 million, which would grant the conglomerate a 30% stake in a semiconductor venture, as confirmed by a third source with direct knowledge of the discussions.

Meanwhile, Reliance subsidiary Jio Platforms has joined forces with NVIDIA to develop a state-of-the-art AI cloud infrastructure. The partnership aims to solidify India’s position as an AI powerhouse by providing researchers, developers, entrepreneurs, and others with access to high-speed, secure cloud computing for a variety of AI projects.