Foxconn withdraws from mega semiconductor manufacturing project in India

Foxconn Building in Taipei (Taiwan)

Taiwan's Foxconn announced on July 10 that it was withdrawing from a $19.5 billion semiconductor manufacturing joint venture with India's Vedanta Group, a new obstacle in Indian Prime Minister Narendra Modi's chip manufacturing plan.

Foxconn, the world's largest contract electronics manufacturer, signed a deal with Vedanta last year to set up semiconductor and display factories in Mr Modi's home state of Gujarat.

"Foxconn has decided not to continue the joint venture with Vedanta," Reuters quoted Foxconn's statement as saying, but did not explain the reason.

Foxconn said it had worked with Vedanta for more than a year to turn “a great semiconductor idea into reality,” but that it had jointly decided to terminate the joint venture and would remove its name from the venture, which is now wholly owned by Vedanta.

Prime Minister Modi has made chipmaking a top priority in India’s economic strategy to pursue a “new era” in electronics manufacturing. Foxconn’s move is a blow to his ambitions to attract foreign investors to produce chips domestically for the first time.

Vedanta Group did not immediately respond to a request for comment. Foxconn is best known for assembling iPhones and other Apple products, but in recent years it has expanded into chips to diversify its business.

Reuters had previously reported that India's plans had hit a snag, with the Vedanta-Foxconn project moving slowly due to a deadlock in negotiations to bring in European chipmaker STMicroelectronics as a partner.

The Vedanta-Foxconn joint venture has agreed to license the technology from STMicroelectronics, but the Indian government has made it clear that it wants the European company to be more involved, such as having a stake in the partnership. STMicro is not interested in that and talks remain at an impasse, according to one source.

India expects its semiconductor market to be worth $63 billion by 2026. Last year, India received three applications to set up factories under a $10 billion incentive program.

Earlier on February 14, 2022, Foxconn announced a partnership with Vedanta to manufacture semiconductors in India to diversify its business. At the time, Foxconn said that this would be "a significant boost to the domestic electronics manufacturing industry in India".

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