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Foxconn pulls out of a $19.5 billion chip joint venture with Vedanta – UnlistedNews

Taiwan’s Foxconn pulled out of a $19.5 billion (roughly Rs. 1,61,133 crore) semiconductor joint venture with Indian metals-to-oil conglomerate Vedanta, it said on Monday in a setback for chipmaking plans. of Prime Minister Narendra Modi for India.

Foxconn, the world’s largest contract electronics maker, and Vedanta signed a pact last year to set up semiconductor and display production plants in Gujarat, Prime Minister Modi’s home state.

“Foxconn has determined that it will not advance the joint venture with Vedanta,” a Foxconn statement said without elaborating.

The company said it had worked with Vedanta for more than a year to bring “a great semiconductor idea” to life, but they had mutually agreed to end the joint venture and will remove its name from an entity now wholly owned by Vedanta. . .

Vedanta and India’s IT ministry did not immediately respond to requests for comment.

PM Modi has made chipmaking a top priority for India’s economic strategy in pursuit of a “new era” in electronics manufacturing, and Foxconn’s move is a blow to his ambitions to attract foreign investors. to manufacture chips locally for the first time.

“The fall of this deal is definitely a setback for the ‘Make in India’ momentum,” said Neil Shah, Counterpoint’s vice president of research, adding that it also doesn’t reflect well on Vedanta and “raises surprises and doubts for other companies.” .

Foxconn is best known for assembling iPhone models and other Apple products, but has expanded into chips in recent years to diversify its business.

Most of the world’s chip production is limited to a few countries, such as Taiwan, with India a late entrant. The Vedanta-Foxconn company announced its chipmaking plans in Gujarat last September, with Prime Minister Modi calling the project “an important step” in boosting India’s chipmaking ambitions.

But his plan had been slow to get off the ground. Among the problems the Vedanta-Foxconn project encountered were stalled talks to involve European chipmaker STMicroelectronics as a technology partner, Reuters previously reported.

While Vedanta-Foxconn succeeded in getting STMicro involved in licensing the technology, the Indian government had made it clear that it wanted the European company to have more “skin in the game”, such as a stake in the partnership.

STMicro was not interested in that and talks remained in limbo, a source said.

The Indian government has said it remains confident of attracting investors for chipmaking. Micron said last month that it will invest up to $825 million (roughly Rs. 6,816 crore) in a chip packaging and testing unit, not for manufacturing. With the support of the federal government of India and the state of Gujarat, the total investment will be $2.75 billion (approximately Rs. 22,721 crore).

India, which expects its semiconductor market to be worth $63 billion (roughly Rs. 5,20,522 crore) by 2026, last year received three applications to set up plants under a $10 billion incentive scheme. (approximately Rs. 82,622 crore).

These were from the Vedanta-Foxconn joint venture, Singapore-based IGSS Ventures and the global consortium ISMC, which counts Tower Semiconductor as a technology partner.

The $3 billion (roughly Rs. 24,786 crore) ISMC project was also stalled due to Tower being acquired by Intel, while another $3 billion IGSS plan was also halted as the company wanted to reapply. .

© Thomson Reuters 2023

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