Foxconn Withdraws from $19.5 Billion Vedanta Chip Project in India

Foxconn, a major Taiwanese electronics manufacturer, has announced its withdrawal from a $19.5 billion joint venture with Vedanta, an Indian conglomerate. This development marks a significant setback for Indian Prime Minister Narendra Modi’s ambitions to establish a semiconductor manufacturing industry in the country.

The partnership, formed last year, aimed to set up semiconductor and display production facilities in Gujarat, Modi’s home state. Foxconn stated that after more than a year of collaboration, both parties mutually agreed to end the joint venture. Vedanta will now fully own the entity initially planned with Foxconn.

Vedanta affirmed its commitment to the semiconductor project, indicating that it has secured other partners to establish India’s first semiconductor foundry. The company emphasized its continued efforts to support Modi’s vision for India’s semiconductor industry.

Sources familiar with the situation cited concerns about delays in receiving incentive approvals from the Indian government and queries regarding the project’s cost estimates as factors in Foxconn’s decision.

Modi has prioritized chipmaking as a key component of India’s economic strategy, aiming to usher in a new era of electronics manufacturing. Foxconn’s exit, however, poses challenges to these plans, particularly in attracting foreign investments for domestic chip production.

Despite the setback, Deputy Information Technology Minister Rajeev Chandrasekhar stated that Foxconn’s decision has no impact on India’s broader chipmaking objectives. He noted that the reasons for the dissolution of the partnership between the two private companies are not for the government to delve into.

Foxconn, primarily known for assembling Apple products, has been diversifying into the semiconductor sector. The global chip industry is concentrated in a few countries, such as Taiwan, with India attempting to enter this competitive market.

The Indian government remains optimistic about attracting investment for chip manufacturing. Notably, Micron recently announced plans to invest up to $825 million in a chip testing and packaging unit in India, with additional support raising the total investment to $2.75 billion.

India’s semiconductor market is projected to reach $63 billion by 2026. Last year, the government received three applications for semiconductor plants under a $10 billion incentive scheme. These included the Vedanta-Foxconn joint venture, Singapore-based IGSS Ventures, and the global consortium ISMC. However, the progress of these projects has faced various challenges.

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