Aluminum Sales at the Heart of Vedanta's Success

After announcing a joint venture between Indian mining conglomerate Vedanta and chip and electronics manufacturer Foxconn in February 2022, the latter pulled out of the deal valued at $19.5 billion on July 10. A successful investment and the proposed building of a semiconductor plant in Prime Minister Narendra Modi's home province of Gujarat would have helped kickstart India's semiconductor industry in a bid to compete with heavyweights like Taiwan, South Korea, China and the United States in the future. As our chart shows, Vedanta makes a large chunk of its money with metals traditionally connected to semiconductor fabrication.

Revenue from customer contracts concerning aluminum, for example, amounted to $6.2 billion out of a total of $15.9 billion in the company's fiscal year 2022, almost doubling from $3.5 billion in 2021. The metal was widely used for wiring in integrated circuits in the past. Since the turn of the century, the usage of copper, which has less resistance than aluminum when conducting electricity, in semiconductor wiring has seen a considerable uptick. This is owed to the implementation of the so-called Damascene process, which cancels out the detracting properties of the metal when combined with silicone. Copper contracts were Vedanta's third most important revenue source in 2022, behind aluminum and zinc.

With chips being integral to a variety of products ranging from smartphones and computers to household appliances and cars, the industry has long been booming. The top 8 in the semiconductor foundry segment, which contains companies manufacturing chips for corporations that don't have any plants of their own and is mainly split up between China and Taiwan, generated revenues of $89.4 billion in 2021. Global semiconductor sales revenue is in a league of its own though. Market leaders Intel, Samsung and SK Hynix were responsible for sales amounting to $182.9 billion in 2022 according to an analysis by Gartner, taking a quarter of the market share in the segment. Overall, revenues with semiconductors stood at $601 billion in the past year.