- Foxconn withdraws from $19.5bn chip manufacturing agreement with Vedanta
- Setback for India’s semiconductor ambitions
- Foxconn and Vedanta to pursue independent strategies in India
Foxconn, an Apple supplier, has withdrawn from a $19.5bn (£15.2bn) agreement with Indian mining giant Vedanta to construct a chip manufacturing facility in the country.
The decision comes less than a year after the companies announced intentions to establish the facility in Gujarat, the home state of Prime Minister Narendra Modi.
According to some analysts, this is a setback for the nation’s technology industry objectives.
According to a government minister, this will not affect the nation’s semiconductor manufacturing ambitions.
“Both parties acknowledged that the project was not moving quickly enough,” Taiwan-based Foxconn said in a statement.
The company added, “There were challenging gaps we were unable to overcome, as well as external issues unrelated to the project.”
Foxconn said it reached a “mutual agreement” with Vedanta, which now owns the venture.
It added that it would “continue to vigorously support the government’s “Make in India” goals.”
Vedanta, based in New Delhi, announced that it “has lined up other partners to establish India’s first [chip] foundry.”
“The unexpected withdrawal of Foxconn is a significant blow to India’s semiconductor ambitions,” said Paul Triolo of the global advisory firm Albright Stonebridge Group.
“The apparent cause of the withdrawal is the joint venture’s lack of a clear technology partner and path,” he added. “Neither party had significant experience with developing and managing a large-scale semiconductor manufacturing operation.”
However, India’s Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar, stated on Twitter that Foxconn’s decision did not affect India’s semiconductor fabrication objectives. None.”
Mr. Chandrasekhar added that Foxconn and Vedanta were “respected investors” in the country and “will now independently pursue their strategies in India.”
The Indian government has been developing strategies to assist the semiconductor manufacturing industry.
China formed a $10 billion fund in 2017 to entice investors and reduce its dependence on foreign chipmakers.
Prime Minister Modi’s 2014 ‘Make in India’ plan aspires to make India a worldwide manufacturing hub like China.
Several companies have announced plans to establish semiconductor factories in India in recent years.
Last month, Micron announced it will invest $825 million to build a semiconductor assembly and testing facility in India.
This year, according to Micron, construction of the new facility in Gujarat will commence. The initiative is anticipated to generate up to 5,000 direct jobs and an additional 15,000 in the surrounding area.
