Foxconn said on Monday that it had withdrawn from a $19.5 billion semiconductor joint venture with Indian metals-to-oil behemoth Vedanta, a setback to Prime Minister Narendra Modi’s chipmaking hopes for India.
Last year, the world’s largest contract electronics manufacturer secured an agreement with Vedanta to establish semiconductor and display manufacturing factories in Modi’s home state of Gujarat.
“Foxconn (2354.TW) has determined that it will not proceed with the joint venture with Vedanta,” a Foxconn statement stated, without explaining.
The business stated that it had worked with Vedanta for more than a year to bring “a great semiconductor idea to reality,” but that they had mutually agreed to discontinue the joint venture and that it will remove its name from an entity that is still in operation.
Vedanta stated that it is totally dedicated to its semiconductor project and that it has “lined up other partners to establish India’s first foundry.” “Vedanta has redoubled its efforts” to realize Modi’s goal, the company said in a statement.
According to a person familiar with the situation, Foxconn’s decision to exit the business was influenced by fears regarding incentive approval delays by the Indian government. According to the source, New Delhi had also raised many concerns about the cost estimates presented in order to solicit government incentives.
Modi has made chipmaking a primary objective for India’s economic policy in pursuit of a “new era” in electronics manufacturing, and Foxconn’s move is a setback to his hopes of recruiting international companies to manufacture chips in India for the first time.
Foxconn’s decision, according to Deputy IT Minister Rajeev Chandrasekhar, has “no impact” on India’s objectives, adding that both businesses are “valued investors” in the country.
He stated that the government should not “get into why or how two private companies choose to partner or choose not to partner.”
