Taiwan’s Foxconn said on Monday that it has exited a $19.5 billion joint venture in the semiconductor sector with Indian metals-to-oil behemoth Vedanta, putting the brakes on Prime Minister Narendra Modi’s plans for Indian chip production.
The largest manufacturer of contract electronics in the world, Foxconn, and Vedanta agreed to establish semiconductor and display manufacturing facilities in Gujarat, Prime Minister Modi’s home state, last year.
The electronics manufacturer stated in a statement that “Foxconn has determined it will not move forward on the joint venture with Vedanta,” but did not provide any other information.
Vedanta and Foxconn had been collaborating on “a great semiconductor idea” for more than a year, but they had mutually agreed to discontinue the joint venture. Moreover Foxconn will have its name removed from what is now a totally owned Vedanta firm.
In order to usher in a “new era” of electronics manufacturing, Modi has made chips making a key goal for India’s economic strategy. Foxconn’s decision is a setback to his hopes of recruiting international companies to produce chips domestically for the first time.
When contacted for comment, Vedanta did not respond right away.
Foxconn is well known for building iPhones and other Apple goods, but it has recently started to diversify its company by stepping into the semiconductor industry.
As previously reported by Reuters, Vedanta-Foxconn’s project was moving slowly due to a stalemate in their negotiations to include European chipmaker STMicroelectronics as a partner, putting Modi’s plan in jeopardy.
Vedanta-STMicro had agreed to license technology to Foxconn, but the Indian government made it plain that it wanted more “skin in the game” for the European business, such as a stake in the joint venture.
A source had earlier stated that STMicro was not keen on it and that the conversations were still ongoing.
Last year, India submitted three proposals to establish facilities under a $10 billion incentive program, estimating that its semiconductor industry will be worth $63 billion by 2026.
These came from IGSS Ventures in Singapore, the Vedanta-Foxconn joint venture, and the international consortium ISMC, which counts Tower Semiconductor among its technology partners.
Due to Tower’s acquisition by Intel, the $3 billion ISMC project has also been put on hold, and IGSS’s $3 billion plan was also shelved since the company intended to reapply.
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