Blow to India? Taiwan’s Foxconn abandons $19.5 billion chipmaking joint venture with Vedanta, but seeks local incentives for new project
Taiwanese manufacturing giant Foxconn has dealt a blow to the Indian chipmaking hopes of Prime Minister Narendra Modi.
This is because on Monday Foxconn withdrew from the $19.5 billion chipmaking joint venture with Indian metals-to-oil conglomerate Vedanta.
It comes after it was reported in March that Foxconn will build a new 300-acre facility in Bengaluru, India to manufacture ‘electronics’, thought to be iPhone parts.
However according to Reuters Foxconn had last year signed a pact with Vedanta to set up semiconductor and display production plants in Modi’s home state of Gujarat.
“Foxconn has determined it will not move forward on the joint venture with Vedanta,” a Foxconn statement was quoted by Reuters as saying, without elaborating on the reasons.
Foxconn reportedly said it had worked with Vedanta for more than a year to bring “a great semiconductor idea to reality”, but they had mutually decided to end the joint venture and it will remove its name from an entity that is now fully owned by Vedanta.
Vedanta said it is fully committed to its semiconductor project and had “lined up other partners to set up India’s first foundry”.
“Vedanta has redoubled its efforts” to fulfil Modi’s vision, the firm reportedly added in a statement.
A source familiar with the matter told Reuters that concerns about incentive approval delays by India’s government had contributed to Foxconn’s decision to pull out of the venture. New Delhi had also reportedly raised several questions on the cost estimates provided to request incentives from the government, the source added.
Among other problems encountered by the Vedanta-Foxconn project were deadlocked talks to involve European chipmaker STMicroelectronics as a tech partner, Reuters has previously reported.
On Tuesday Foxconn then told Reuters that it remains committed to chipmaking in India, and it denied the ending of the joint venture with Verdanta was a setback for the country.
Indeed, Foxconn said it intends to apply for incentives under India’s semiconductor manufacturing plan, Reuters reported.
Foxconn reportedly said it was working towards applying under India’s Modified Programme for Semiconductors and Display Fab Ecosystem, a $10 billion plan offering incentives of up to 50 percent of capital costs for semiconductor and display manufacturing projects.
“We have been actively reviewing the landscape for optimal partners,” the iPhone maker was quoted as saying in a statement. “Foxconn is committed to India and sees the country successfully establishing a robust semiconductor manufacturing ecosystem.”
Foxconn is in talks with several local and international partners to make semiconductors in India using mature chip manufacturing technology for products including EVs, two people with direct knowledge of the discussions told Reuters.
“The company will continue to be there, just that it will find other partners,” one of the people reportedly said.
India expects its semiconductor market to be worth $63 billion by 2026, but PM Modi’s plan has so far not resulted in any chip making fabs, Reuters reported.
Reuters reported that three companies applied for incentives last year – Vedanta-Foxconn JV, Singapore-based IGSS Ventures and global consortium ISMC – but so far no actual chipmaking factory plan has been agreed.
Explaining its breakup with Vedanta, Foxconn told Reuters on Tueday “there was recognition from both sides that the project was not moving fast enough” and there were other “challenging gaps we were not able to smoothly overcome.”
The two sources also told Reuters on Tuesday that Indian authorities and Foxconn were both allegedly concerned about Vedanta’s finances, which had also contributed to the Taiwanese firm’s decision to end the JV.