Foxconn and Vedanta abandon joint chip factory plan in India

After withdrawing from the $19.5 billion joint venture with Vedanta Group, Taiwan-based electronics manufacturer Foxconn plans to apply for incentives offered by the Indian government as part of the Modified Programme for Semiconductors and Display Fab Ecosystem to set up a chipmaking unit in the country.

"Both parties mutually agreed to part ways. This is not a negative. There was recognition from both sides that the project was not moving fast enough, there were challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project," says the statement issued by Foxconn.

The firm mentioned that it is looking for local as well as international partners to set up a chip production unit in India. As a manufacturer that works with device makers like Apple and Xiaomi, the company would have played a key role in securing orders for chips.

Setting up a fab unit is among the Indian government's priorities and the collapse of the JV will present a setback. Predictably, however, the government downplayed this development. The Union Minister of Electronics and IT, Ashwini Vaishnaw, tweeted, "Both the companies, Foxconn and Vedanta, are committed to India's semiconductor mission and Make in India program." Similarly, Minister of State for Electronics and IT Rajeev Chandrasekhar said the development has no impact on India's semiconductor fabrication plant goal.

Chipmaking incentives

Both Vedanta and Foxconn have refrained from talking about the reasons for the collapse of the joint venture. They had been trying hard to find a technology partner to manufacture semiconductors, as required to take advantage of benefits from the government's scheme. The Vedanta-Foxconn joint venture was believed to be in talks with STMicroelectronics as a technology partner.

India has been trying to become self-reliant and developing chipmaking capabilities is a crucial part of this. The country introduced a $10 billion plan in 2021 offering incentives of up to 50% of capital costs for semiconductor manufacturing initiatives.

The Foxconn-Vedanta JV was one of three entities that had applied for the incentives. Singapore-based IGSS Ventures and ISMC, including Israel-based Tower Semiconductor as the technology partner, were the other two entities. However, none of them received approval and now the government has invited fresh applications for the scheme. Foxconn and Vedanta are likely to apply separately for the incentives now.

Meanwhile, Micron recently announced that it would be investing $2.7 billion to set up a chip assembly and packaging unit in India.

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— Gagandeep Kaur, Contributing Editor, special to Light Reading