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ISMC asks Indian govt not to accept Tower Semiconductor’s fresh application

The battle between ISMC Analog Fab and Israeli company Tower Semiconductor is escalating, with the law firm of the former taking up the matter with the government through communication on March 8 to the India Semiconductor Mission (ISM), urging it not to clear their fresh application for setting up a fabrication (fab) plant without ISMC.

The law firm has also asked them to note that its clients will seek legal remedies against Tower, among others, for breaching their agreement and committing unlawful action.

ISMC’s lawyers have informed ISM that Tower has unilaterally, in partnership with a third party introduced by their clients, applied for government approval. The lawyers have said that their clients strongly object to Tower unilaterally seeking government approval for a competing project and have declared that legal remedies will be pursued against Tower.

Ajay Jalan, who heads the ISMC consortium, said, “Yes, our lawyers have sent communication to the government through ISM. They need to understand our grievances as our proposal has not been formally rejected by ISM.”

A questionnaire to Tower did not elicit any response until the time of going to press.

ISMC had tied up with Tower, and an agreement was signed on December 31, 2020, for setting up a 300-millimetre manufacturing analogue/mix fab project in India. Following the agreement, ISMC was one of the three players that applied for assistance under the semiconductor scheme overseen by ISM.

The lawyers state that their client had also applied for land in Karnataka for the plant and had invested time, money, and resources in this initiative. Due to changes in the policy, including higher enhanced incentives (even ISMC would get 50 per cent of the cost of the project as an incentive), they intended to make a revised application with Tower’s assistance. However, the latter unilaterally cancelled the unlawful agreement — a serious breach of contract causing the client grievous harm.

Tower has also undergone changes.

Its agreement to be part of the ISMC consortium and its key technology partner was followed by the company announcement that it is being acquired by Intel Inc for $5.3 billion in February 2022. As a result, the ISMC project went into a tight spot as Intel was not willing to give any assurances or guarantees on agreements like that of ISMC until they got control of Tower.

However, even this deal fell through as it was unable to get clearance from China for the deal, and it was terminated in August 2023.

Tower in September sent a letter to ISMC terminating their agreement. In October, a high-level delegation from Tower, led by Russell C Ellwanger, its chief executive officer, and Minister of State for Electronics & Information Technology Rajeev Chandrasekhar, showed interest in setting up a fab plant in India. It has applied for permission to set up an $8 billion fab plant, according to government sources. Business Standard

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