Summary:
- Foxconn has withdrawn from a $19.5 billion semiconductor joint venture with Vedanta, delivering a setback to Prime Minister Narendra Modi’s chipmaking plans for India.
- Concerns about incentive approval delays by the Indian government contributed to Foxconn’s decision to pull out of the venture.
- Vedanta remains committed to its semiconductor project and is exploring other partners.
Foxconn’s Withdrawal and Modi’s Ambitions
Taiwan’s Foxconn, the world’s largest contract electronics maker, has announced its withdrawal from the $19.5 billion semiconductor joint venture with Indian conglomerate Vedanta. The joint venture was part of Prime Minister Narendra Modi’s plan to establish India as a semiconductor manufacturing hub. This decision by Foxconn is seen as a setback to Modi’s ambitions.
Reasons for Foxconn’s Withdrawal
Foxconn did not provide specific reasons for its withdrawal from the joint venture. However, sources familiar with the matter indicate concerns about incentive approval delays by the Indian government as a contributing factor. The government also raised questions about the cost estimates provided by the companies to request incentives.
Vedanta’s Commitment and Future Plans
Vedanta has expressed its full commitment to the semiconductor project and has lined up other partners to establish India’s first foundry. The company is determined to fulfill Modi’s vision of boosting chipmaking in India.
Impact and Reactions
The collapse of this deal is viewed as a setback for the “Make in India” initiative. Industry experts and analysts raise concerns about the credibility of Vedanta and its ability to attract future partnerships. Deputy IT Minister Rajeev Chandrasekhar downplayed the impact of Foxconn’s decision, stating that it will not affect India’s plans and emphasizing that both companies are valued investors in the country.
Foxconn’s Diversification and India’s Chipmaking Ambitions
Foxconn, best known for assembling iPhones and other Apple products, has been expanding into chips to diversify its business. India aims to establish itself as a significant player in chip manufacturing. However, the progress has been slow, with the Vedanta-Foxconn project facing challenges, including deadlocked talks with European chipmaker STMicroelectronics. The Indian government remains confident in attracting investors for chipmaking.
Other Investments in India’s Semiconductor Market
Last month, Micron announced an investment of up to $825 million in a chip testing and packaging unit in India. The government has also re-invited applications for a $10 billion incentive scheme aimed at attracting companies to set up semiconductor plants in India.
Conclusion
Foxconn’s decision to withdraw from the Vedanta chip project deals a blow to India’s chipmaking ambitions. It highlights the challenges and delays faced by the Indian government in attracting foreign investment in the semiconductor sector. Vedanta remains determined to pursue its semiconductor project with other partners and fulfill Modi’s vision of making India a chip manufacturing hub.
Reporting by Munsif Vengattil in Bengaluru, Ben Blanchard in Taipei, Aditya Kalra in New Delhi; Additional reporting by Rishika Sadam; Editing by David Goodman and Alexander Smith
