(CTN News) – As announced on Monday, Foxconn has pulled out of a $19.5 billion semiconductor joint venture with Indian metals-to-oil conglomerate Vedanta, ending Prime Minister Narendra Modi’s chip manufacturing plans in the country.
There was a deal signed last year between Foxconn, the world’s leading contract electronics maker, and Vedanta that would see both companies set up production plants for semiconductors and displays in Gujarat, the state of Modi’s birth.
“Foxconn has decided not to go ahead with the Vedanta joint venture,” the electronics maker said in a statement, without giving any further details on the reasons for the decision.
It was reported that Foxconn had worked with Vedanta for more than a year to bring “a great semiconductor idea to reality”, but the two parties had mutually decided to end the joint venture and Foxconn will remove its name from what is now a fully-owned Vedanta company.
In pursuit of a “new era” in electronics manufacturing, Indian Prime Minister Modi has made chipmaking one of the top priorities of his economic strategy, and Foxconn’s decision represents a blow to his ambitions of luring foreign investors to invest in India by producing chips locally for the first time in the country’s history
In response to a request for comment, Vedanta did not respond immediately to our inquiry.
As a part of its diversification effort, Foxconn has been expanding into chips in an effort to diversify its business beyond assembling iPhones and other Apple products.
It has been reported by Reuters previously that Modi’s plans were in trouble with work on Vedanta-Foxconn’s project moving slowly as their discussions to enlist STMicroelectronics as a partner were at a standstill.
Vedanta-Foxconn had signed a licensing agreement with STMicro for licensing the company’s technology, but the Indian government had been clear that it wanted the European company to have more “skin in the game”, such as a stake in the venture.
A source previously told me that STMicro wasn’t keen on that idea and the talks remained in limbo as a result.
Last year, India received three applications to set up plants in the country under a $10 billion incentive scheme as part of its plan for the semiconductor market to reach $63 billion by 2026.
A few of these products come from Vedanta-Foxconn joint venture, ISMC, a global consortium which counts Tower Semiconductor as a technology partner, and IGSS Ventures, a Singapore-based investment firm.
IGSS also has a $3 billion plan stalled due to Tower’s acquisition by Intel, and another $3 billion plan by ISMC has also been halted due to the firm wanting to resubmit its application after Tower’s acquisition by Intel.