In a blow to Indian Prime Minister Narendra Modi’s plans for chip production, Taiwan’s Foxconn has pulled out of a $19.5 billion (approximately Rs. 1,61,133 crore) semiconductor joint venture with Vedanta of India.
The largest manufacturer of contract electronics in the world, Foxconn, and Vedanta agreed to establish semiconductor and display manufacturing facilities in Gujarat, the home state of Prime Minister Modi, last year.
The business claimed it had been collaborating with Vedanta for more than a year to “bring a great semiconductor idea to life,” but they had mutually agreed to discontinue the joint venture, and it will remove its name from a firm that is now wholly controlled by Vedanta.
In order to usher in a “new era” in electronics manufacturing, PM Modi has made chipmaking a top goal for India’s economic strategy. Foxconn’s decision is a setback to his hopes of persuading international firms to start making chips domestically.
Neil Shah, Vice President of research at Counterpoint, stated that “this deal falling through is definitely a setback for the ‘Make in India’ push,” adding that it also “raises eyebrows and doubts for other companies,” and that Vedanta is to blame.
In order to diversify its business, Foxconn, which is best known for producing iPhone models and other Apple products, has been moving into the chip industry recently.
A few nations, including Taiwan, produce the majority of the world’s chips; India is a late entry. In Gujarat last September, the Vedanta-Foxconn joint venture unveiled its plans to manufacture chips. Prime Minister Modi referred to the initiative as “an important step” in advancing India’s chip manufacturing aspirations.
But the execution of his plan had been sluggish. Deadlocked negotiations to include European chipmaker STMicroelectronics as a technology partner were among the issues the Vedanta-Foxconn project ran into, according to a prior report from Reuters.
Even though STMicro agreed to a technological licensing deal with Vedanta-Foxconn, the Indian government had made it clear that it wanted the European company to have more “skin in the game” by taking a stake in the collaboration.
