According to Reuters, on July 10th, Foxconn announced that it had withdrawn from a $19.5 billion semiconductor joint venture with Indian multinational mining group Vedanta. This has caused a setback to India's blueprint for chip manufacturing.
Last year, Foxconn signed an agreement with Vedanta to establish a semiconductor production factory in India. Foxconn stated in a statement that the two sides have been working together for over a year and are committed to turning "a great semiconductor idea into a reality".
However, Foxconn stated that it has decided not to further its joint venture with Vedanta. Foxconn will remove Foxconn's name from the joint venture, which is now fully owned by Vedanta.
In addition, Foxconn did not provide a detailed reason for its withdrawal in the statement.
Vedanta stated that the company will be fully committed to its semiconductor projects and has "invited other partners to establish an Indian chip factory". Vedanta added in a statement that "Vedanta has doubled its efforts" to achieve India's chip manufacturing vision.
A person familiar with the matter said that one of the reasons Foxconn decided to withdraw from the joint venture was concerns about the delay in approving incentive measures by the Indian government. Insiders added that the Indian government has also raised some issues with the cost estimates provided by Foxconn when applying for incentive measures from the government.
India has made chip manufacturing the top priority of its economic strategy to pursue the "new era" of electronic manufacturing, but Foxconn's move is a blow to the country's attraction of foreign investors to establish chip manufacturing businesses in the local area.
Neil Shah, Vice President of Counterpoint Research, stated that "the failure of this transaction is definitely a setback for the 'Made in India' blueprint." He added that this is also not conducive to Vedanta and "will raise concerns and doubts from other companies.
Rajeev Chandrasekhar, Deputy Minister of Information Technology of India, stated that Foxconn's decision had "no impact" on India's plans, adding that both companies were "valuable investors" in India. He stated that the government should not "explore the reasons and ways in which two private enterprises choose to cooperate or not".
In addition, Reuters reported earlier that the problems encountered in the joint venture project between Vedanta and Foxconn included the impasse in the technical cooperation negotiations with STMicroelectronics.
Although the joint venture project between Vedanta and Foxconn has successfully obtained the technology license of STMicroelectronics, the Indian government clearly expressed its hope that this European company could "participate in" more, such as participating in shares in cooperation. However, a person familiar with the matter said that STMicroelectronics was not keen on this, and the negotiations were still at an impasse.