Prime Minister Narendra Modi has big ambitions for India’s chip industry.
REUTERS/Amit Dave
Foxconn said Monday it’s scrapping a $20 billion JV with Indian conglomerate Vedanta to make semiconductors.
Other plans to boost India’s chipmaking sectors are also progressing slowly.
Indian Prime Minister Narendra Modi’s government wants to make India a chipmaking powerhouse.
India has big plans to boost its chipmaking industry, but the country is already meeting setbacks.
On Monday, Taiwan’s Foxconn — best known for being a major parts supplier to Apple — said it’s withdrawing from a $19.5 billion joint venture with Indian conglomerate Vedanta without citing a reason for the breakup.
The two companies signed an agreement in February 2022 to form a joint venture, or JV, to manufacture semiconductors in India.
“Foxconn has determined it will not move forward on the joint venture with Vedanta,” the company, known as Hon Hai Technology Group in Taiwan and China, said in a Monday statement to the Taiwan Stock Exchange. The JV is now wholly owned by Vedanta, it added.
Foxconn said the two companies had worked for over a year to bring “a great semiconductor idea to reality,” but have mutually agreed to end the JV, which is now wholly owned by Vedanta.
Foxconn did not explain why it exited the JV. The company did not immediately respond to a request for comment from Insider. A source familiar with the matter told Reuters that concerns over delays for approvals of incentives contributed to Foxconn’s decision to abandon the venture in Gujarat, the home state of Prime Minister Narendra Modi.
The breakup is seen as a setback to Modi’s ambition for India to become a key player in the global chip supply chain amid the geopolitical tensions in the Taiwan Straits.
India already has an existing chipmaking industry, but Taiwan — which China claims as its territory — produces a vast majority of the world’s chips. Taiwan Semiconductor Manufacturing Company alone makes over half of the world’s supply, Insider reported previously.
However, India’s chip manufacturing expansion plans have been moving slowly.
Apart from Foxconn abandoning its JV with Vedanta, two other chipmaking ventures are also in limbo.
A $3 billion venture under global consortium ISMC — which counts Israel’s Tower Semiconductor as a partner — has stalled, as Tower is in the process of being acquired by tech bigwig Intel, Reuters reported on June 1.
Another $3 billion project by Singapore-based IGSS venture has also been halted because the company wanted to re-submit its application for government incentives, per Reuters.
However, it hasn’t been all bad news for India’s tech ambitions. US chipmaker Micron said last month it plans to invest up to $825 million in a chip testing and packaging unit in India.
Rajeev Chandrasekhar, India’s minister of state for electronics and IT, tweeted Monday that Foxconn’s decision to pull out of its JV Vedanta would have “no impact” on the country’s chipmaking goals.
“To those editorializing abt this decision of Foxconn/Vedanta being a ‘blow’ to Indias Semicon ambition , I can only say its a bad idea to bet against India under PM Modi😁🤷,” Chandrasekhar tweeted.
—Rajeev Chandrasekhar 🇮🇳 (@Rajeev_GoI) July 10, 2023
Vedanta did not immediately respond to a request for comment from Insider.