Foxconn, the world’s largest contract electronics maker, has announced that it is exiting a $19.4 billion joint venture with Indian metals and energy conglomerate, Vedanta, to build one of India’s first chip factories. This move is seen as a blow to the Indian government’s plans to develop the country into a tech manufacturing powerhouse. However, Foxconn has stated that it remains committed to investing in Indian chipmaking and will apply for a government program that subsidizes the cost of setting up semiconductor factories in the country.
The decision to end the joint venture was based on “mutual agreement” and allows Foxconn to explore other development opportunities. The project will now be solely owned by Vedanta. Since announcing the deal in February 2022, Foxconn has been working with Vedanta on plans to set up a semiconductor plant in India to support a wider ecosystem for manufacturers. The total investment for the facility was estimated to be 1.54 trillion rupees ($19.4 billion).
Foxconn CEO Young Liu has been actively seeking Indian partners in recent months and has traveled to India to explore collaborations. The company already has factories in the Indian states of Andhra Pradesh and Tamil Nadu and is among the many global tech firms looking to diversify their supply chains beyond China.
The Indian government has expressed that both Vedanta and Foxconn are still committed to India’s semiconductor manufacturing goals, despite the end of their joint venture. The project was seen as a milestone in India’s campaign to attract more investment in manufacturing and boost employment. Prime Minister Narendra Modi had previously framed the project as a significant boost for the economy and job creation.
In response to the news, Foxconn’s shares rose 1.3% in Taipei, while Vedanta’s shares fell 1.4% in Mumbai. Other prominent tech companies, including US chipmaker Micron, have recently announced plans to expand production in India. Micron revealed last month that it will invest up to $825 million in a new semiconductor assembly and test manufacturing facility in the western state of Gujarat, creating thousands of new jobs.
Despite the setback with Foxconn, the Indian government remains focused on attracting tech manufacturing investments and building a robust semiconductor industry in the country.