Foxconn withdraws from $19.5 billion semiconductor joint venture project with Vedanta

Foxconn announced on Monday that it has withdrawn from a $19.5 billion semiconductor joint venture project with Vedanta. Also Read: Foxconn Pulls Out over 300 Chinese Engineers From India Ahead of iPhone 17 Launch

“Foxconn has determined it will not move forward on the joint venture with Vedanta,” a Foxconn statement said without elaborating on the reasons. Also Read: Apple's biggest iPhone manufacturer, Foxconn, to invest $1.54 billion in India

Both the company signed a pact, last year, to set up semiconductors and display manufacturing units in Gujarat. Also Read: Government to offer incentives for Dell, HP, Foxconn to make laptops locally

After collaborating with Vedanta for over a year to bring “a great semiconductor idea to reality”, the company said that it had agreed to part ways and it will withdraw its name from an entity that is now fully owned by Vedanta.

For unversed, Vedanta Foxconn Semiconductors Ltd (VFSL) was a joint venture between Vedanta Group from India and Hon Hai Precision Industry from Taiwan. Vedanta had a 63 percent stake and Hon Hai Precision Industry had a 37 percent stake in the company.

A person close to the situation said Foxconn’s decision to exit the venture was influenced by concerns about the delays in incentive approvals from the Indian government. The source also said the government has raised several questions on cost projections the company has provided to seek incentives from the government, as reported by Reuters. 

Vedanta said it is fully committed to its semiconductor project and had “lined up other partners to set up India’s first foundry”.

MoS IT Rajeev Chandrasekhar said Foxconn’s decision will have no impact on India’s plans and he added that both companies were “valued investors who are creating jobs n growth” in the country.

The government is currently evaluating a 40nm fab proposal submitted by Vedanta through VFSL. The proposal is “backed by Tech licensing agreement from a Global Semicon major,” as per the information shared by the minister. 

The minister also said that it was not for the government to “get into why or how two private companies choose to partner or choose not to”. 

➡️This decision of Foxconn to withdraw from its JV wth Vedanta has no impact on India's #Semiconductor Fab goals. None.

➡️Both Foxconn n Vedanta have significant investments in India and are valued investors who are creating jobs n growth.

➡️It was well known that both… https://t.co/0DQrwXeCIr

— Rajeev Chandrasekhar 🇮🇳 (@Rajeev_GoI) July 10, 2023

While Vedanta-Foxconn was able to get STMicroelectronics to license its technology, the Indian government wanted the European company to have a more significant investment in the partnership, such as a stake in the company and STMicro was not interested in that. 

The Indian government has expressed its optimism about attracting chipmaking investors. Micron recently announced its decision to invest up to $825 million in a chip testing and packaging facility rather than a manufacturing plant.

India received three applications to set up plants under a $10 billion India Semiconductor Mission last year. These applications were from Vedanta-Foxconn joint venture, Singapore-based IGSS Ventures and global consortium ISMC, which has Tower Semiconductor as a tech partner.

Tower’s acquisition by Intel and IGSS’s desire to re-apply have stalled the other two projects. The government is now seeking new applications from companies.