Taiwan’s Foxconn has withdrawn from a $19.5bn semiconductor joint venture with Indian metals-to-oil conglomerate Vedanta, it said, a setback to Prime Minister Narendra Modi’s chipmaking plans for India. The world’s largest contract electronics maker signed a pact with Vedanta last year to set up semiconductor and display production plants in Modi’s home state of Gujarat.
Foxconn has decided not to move forward on the joint venture with Vedanta, without providing reasons for the decision. Foxconn and Vedanta had been working together for over a year to bring a semiconductor project to reality, but they have now mutually decided to end the joint venture, and Foxconn will remove its name from the entity which is now fully owned by Vedanta.
Vedanta stated its commitment to the semiconductor project and announced that it has lined up other partners to set up India’s first foundry. They have reaffirmed their efforts to fulfill Prime Minister Modi’s vision.
Sources familiar with the matter stated that concerns about incentive approval delays by India’s government contributed to Foxconn’s decision to pull out of the semiconductor venture. The government of India had also raised questions regarding the cost estimates provided to request incentives.
Prime Minister Modi has prioritized chipmaking as part of India’s economic strategy to boost electronics manufacturing. The withdrawal of Foxconn from the joint venture is considered a setback for India’s ‘Make in India’ push. Neil Shah, Vice President of Research at Counterpoint, expressed concern that this development does not bode well for Vedanta and raises doubts for other companies interested in investing in India.
Deputy Information Technology Minister Rajeev Chandrasekhar stated that Foxconn’s decision will not impact India’s chipmaking plans and reaffirmed that both Foxconn and Vedanta are valued investors in the country. He further mentioned that it is not the government’s place to speculate on the private partnership decisions of companies.
Foxconn, known for assembling Apple products, has been expanding into chipmaking in recent years. While most chip production is currently limited to a few countries, such as Taiwan, India aims to establish itself in the chipmaking industry. The Vedanta-Foxconn project, announced in Gujarat last year, encountered various challenges, including difficulties in involving European chipmaker STMicroelectronics as a tech partner.
Despite the setback, the Indian government remains confident about attracting investors for chipmaking. Micron recently announced plans to invest up to $825m in a chip testing and packaging unit in India. The government is also reinviting applications for its $10bn incentive scheme for chip manufacturing projects.
