Foxconn Ties Up With STMicroelectronics NV For A Semiconductor Plant
Taiwan's Foxconn and Franco-Italian STMicro are looking to build a 40-nanometer chip plant, sources told Bloomberg news. The project will seek and expect anywhere between 50% and 70% subsidies including from the state in which it is being constructed.
Our Top Reports For Today
- [01:00] Foxconn returns to the table after breakup with Vedanta, to tie up with STMicroelectronics NV for a semiconductor plant.
- [04:48] Stocks Stay Up, Morgan Stanley predicts a 10% run up in markets to elections.
- [06:57] A Veg Thali is now 24% more expensive, falling tomato prices help
- [08:42] What Does G20 Have In Store for India? with Indrani Bagchi, Ananta Centre
- [17:22] Stockpicking in a heated market, should one buy loss making companies? with Bharat Shah, ASK Investment Managers
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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Foxconn Technology Group is partnering with STMicroelectronics NV for a bid to build a semiconductor factory in India.
Taiwan’s Foxconn and Franco-Italian STMicro are looking to build a 40-nanometer chip plant, sources told Bloomberg news. Such mature chips are used in cars, cameras, printers and a wide variety of other machines.
The project will seek and expect anywhere between 50% and 70% subsidies including from the state in which it is being constructed.
Foxconn’s earlier attempt to partner billionaire Anil Agarwal’s Vedanta Resources Ltd. fell apart after a year of little progress. The joint venture would have led to a $19.5 billion investment and plant.
STMicro is a chip industry pioneer as opposed to contract manufacturer Foxconn. STM is a $16 billion, Geneva-headquartered company. It has 14 manufacturing sisters and more than 50,000 employees worldwide, with 9000+ people working in R&D and product design alone with some 19,500 active and pending patents claimed.
Neither Foxconn or Vedanta could put together a project with production-ready chip technology for obtaining approvals for state subsidies.
Foxconn, is Apple Inc.’s key assembly partner and is also in talks with a few other companies that have chip-making technology, one of the people said.
India, like countries including the US, is trying to boost chip output to reduce reliance on expensive imports and dependence on Taiwan and China.
Prime Minister Narendra Modi has pledged $10 billion to woo chipmakers, promising his administration will bear half the cost of setting up semiconductor sites.
That effort has prompted US memory chip firm Micron Technology Inc. to announce a $2.75 billion assembly and testing facility in Gujarat.
The first company to launch made in India memory chips will be Delhi-based Sahasra Electronics. They are expected to launch between this month and the next.
Sahasra, which has traditionally produced a range of electronics equipment including pen drives and solid state drives used either outside or inside computers for memory storage. Sahasra got going with its semiconductor project on January 21 and test runs have been taking place since March.
In its current form, Sahasra is more an outsourced semiconductor assembly and test (OSAT) company, which means it assembles and packages chips for other brands after importing the wafers..
Any chip project, including Foxconn’s, will have to make detailed disclosures including whether it has firm, binding agreements with a technology partner for production, as well as financing plans..
Other chip-related companies also setting up in India include Advanced Micro Devices Inc. and equipment maker Applied Materials Inc., which plans to spend $400 million each on R&D and engineering centres in Bengaluru.
As we have discussed in The Core report earlier, India is in a global race to grab manufacturing moving out of China. The race is also driven by subsidies being offered by several countries.
Moreover, in areas like semiconductors and batteries, being the fuels of the future, there is strategic importance or imperative to have domestic manufacturing. Or put differently, supply chain anxiety.
The Wall Street Journal reports that Intel has been offered $11 billion in subsidies from the German government to build two semiconductor plants, in what Prime Minister Olaf Scholz called the largest foreign direct investment in German history.
Stocks Stay Up, A Mini Bull Market
Several leading institutional brokerages are already speculating on what will or not happen in the general elections at this point scheduled to be held in April/May next year.
Whether or not elections will affect economic growth or the fate of the Sensex is not clear to me but it does seem a little early to kick off these discussions. But then stock markets and stock prices are about pricing in the future so there must be some method in this madness.
Morgan Stanley, the perennial bull in a report titled quite suggestively, One Billion Voters: Will They Please the Market? says it expects the market to rise ~10% to the election date in anticipation of continuity and a majority.
Post election, we see potential for the market to swing in a wide range, depending on the outcome. The biggest investor debate is whether India will vote for continuity and a majority, says Morgan Stanley, also mentioning - lest it not be caught out later - that all this assumes that the election dates are not advanced, which is a possibility.
More importantly, Morgan Stanley points out that historically the Indian market approaches elections with optimism, pricing in results that favours continuity in Government with a majority.
You might be tempted to conclude that Morgan Stanley is somewhat openly batting for the present BJP Government. To be fair, continuity is what markets and investment banks always like and uncertainty is what everyone hates.
Morgan Stanley also asks us not to ignore non-political factors: The US stock market, interest rates, growth, crude oil prices, inflation will all be in the mix when it comes to share prices.
Meanwhile, the BSE Sensex ended the day up 385 points at 66,266. In doing so, the BSE index has now rallied 1,434 points in the last five straight trading days.
The NSE Nifty closed 116 points higher at 19,723. The 50-share index has now risen 473 points in the last five straight sessions.
Thali Prices Still Stay Up
If the markets are rising, other prices must be rising too. Actually, there is no such theory though it does feel like that.
We are back with rating agency Crisil’s thali economics, or its monthly indicator of food plate cost.
The cost of vegetarian thali in an average Indian household jumped 24 per cent in August as compared to August 2022, ratings agency CRISIL said in its monthly Roti Rice Rate report released on Thursday.
This is the second time that the cost of veg thali rose in 2023-24. Non vegetarian thali rose 13%.
Out of the 24 per cent, 21 percent can be attributed solely to the price of tomato, which rose 176 per cent year-on-year (y-o-y) to Rs 102 kg from Rs 37 per kg last year.
Importantly, some prices are going down too.
Tomato prices are of course down now, to Rs 51 per kg or so.
Edible oils are down 17% year on year, as we have been discussing on The Core Report. And also, as i just learned potatoes, by 14%.
Finally, gas cylinder prices are down and for homes using LPG for cooking will find the bill a little lower. Gas cylinders were costing Rs 1,103 and are now down to Rs 903 for most consumers.
A veg thali just in case you wished to be reminded, comprises roti, vegetables (onion, tomato, and potato), rice, dal, curd, and salad.
Its average cost is calculated based on input prices prevailing in north, south, east, and west India.
G20 Is Today, What Should We Look Out For?
There’s a good chance that you have encountered some aspect of a G20 meeting or visit in your city or town in India.
The one-year program is now ending this weekend with the final summit in Delhi.
So, let's get a quick background before we find out what we should lookout for or takeaways we can expect.
The G-20 was founded in 1999 after the Asian financial crisis of 1997-98 as a broader, informal forum for finance ministers and central bank governors to discuss “economic and financial stability.”
Since the 2008 global financial crisis though there have been annual meetings of government leaders.
The G20 does not have permanent staff or headquarters for either and different members take turns being president and setting priorities as India is currently. Broadly, as per figures from Bloomberg, The body collectively represents 85% of global economic output, 75% of international trade and two-thirds of the world’s population.
G20 members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US, plus the European Union.
However, others are also invited adn this year’s invitees also include: Bangladesh, Egypt, Mauritius, Nigeria, Oman, Singapore and the United Arab Emirates.
The G20 focuses on economic issues, climate change and education and could also reflect, depending on the year, the Covid-19 pandemic, Russia’s war in Ukraine.
More agenda items and deliverables are driven by the host nation. In India’s case these include taking a “human-centric” approach to issues like climate change and food security, says Bloomberg. More specifically, Prime Minister Narendra Modi is pushing for an agreement among members to triple renewable energy capacity by 2030, after a similar proposal was blocked by oil titans Saudi Arabia and Russia in July.
So what are the big takeaways expected? Also remember that both Xi Jinping and Vladimir Putin are not coming.
I reached out to Indrani Bagchi, CEO of foreign affairs think tank Ananta Centre and also former Diplomatic Editor of Times of India and now a columnist there. I began by asking her what she was looking out for.
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Finally, before I go, here is a sneak peek of my conversation with Bharat Shah, Director of ASK Investment Managers, a well known wealth and portfolio management firm.
Shah, is an old hand at fundamental investing in the markets and someone I would love to interview, though I haven't had that many opportunities, when I am little confused on what reflects value and does not.
I did get that opportunity this time and asked him how he was looking at stock picking in current public markets and whether, if anything had changed ? The question of course reflected my own confusion at seeing a battery of tech-IPOs, for lack of any other term, hit the market in the last year, most of whom are at this point quoting below their offer prices.
The full interview plays out on The Core Report Weekend Edition on Saturday on video on YouTube and audio on Apple Podcasts and Spotify.
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That’s it from me and the team at The Core Report, led by our executive producer Joshua Thomas. Do visit www.thecore.in
Have a great weekend ahead and see you on Monday for our weekday edition.
Bye for now.
