Foxconn Drops $19.5 Billion Vedanta Chip Plans in India; Centre Says No Impact on Semiconductor Goals

Taiwan’s Foxconn announced its withdrawal from a $19.5 billion joint venture with Indian metals-to-oil conglomerate Vedanta, in a major setback to the government’s chipmaking ambitions.

Last year, Foxconn and Vedanta had entered into an agreement to establish semiconductor and display production facilities in Gujarat. The reasons behind Foxconn’s decision were not disclosed.

“Foxconn has determined it will not move forward on the joint venture with Vedanta. Foxconn is working to remove the Foxconn name from what now is a fully-owned entity of Vedanta,” it said in a statement.

‘No Impact on India’s Semiconductor Fab Goals’

Union Minister Ashwini Vaishnaw responded to the development stating, “Both the companies Foxconn and Vedanta are committed to India’s semiconductor mission and Make in India program.”

Minister of State for Electronics and IT Rajeev Chandrasekhar said, “The decision by Foxconn to withdraw from its joint venture with Vedanta has no impact on India’s semiconductor fabrication goals.”

Chandrashekar said, both Foxconn and Vedanta have made significant investments in India and are valued investors who contribute to job creation and economic growth.

He further noted that it was well-known that neither company had prior experience or technology in the semiconductor industry, and it was expected that they would source fabrication technology from a suitable tech partner. “While their JV VFSL had originally submitted a proposal for 28nm fab, they could not source appropriate Tech partner for that proposal,” he said.

The Minister said Vedanta, through VFSL, has recently submitted a proposal for a 40nm fab, backed by a tech licensing agreement from a global semiconductor major and the proposal is currently being evaluated by a tech advisory group.

The senior minister said that it is not the government’s role to question or speculate on the decisions made by two private companies regarding their partnerships. However, he stated that the withdrawal of Foxconn from the joint venture with Vedanta simply means that both companies now have the freedom to independently pursue their strategies in India and establish appropriate technology partnerships in the semiconductor and electronics sectors.

Opposition Reacts

Chandrasekhar’s clarification came as Opposition leaders criticising the BJP-led central government regarding the issue. Shiv Sena leader Aditya Thackeray targeted the government in a tweet, stating, the project was entirely viable in Maharashtra. The Maharashtra government must also provide clarification on why, despite the Chief Minister making an announcement in the assembly and the Deputy Chief Minister meeting with them, the project was abruptly shifted from a highly feasible location in Pune district to Gujarat, he said.

Rajya Sabha MP Priyanka Chaturvedi said, “taking it away from Maharashtra to Gujarat – which by experts wasn’t conducive for semiconductor industry, inability to raise funds as expected has led to the collapse of an idea before it even began. Such a tragedy.”

The Congress slammed the BJP government with senior leader Jairam Ramesh stating, “Remember the publicity at the time of announcing the project? Gujarat CM even claimed 1 lakh jobs will be created! This has been the fate of many MOUs signed in Vibrant Gujarat summits year after year, and will be the fate in other such copycat summits like Global Investor Summits in UP. Whether Gujarat Model or ‘New India’ never trust the manufactured headlines,” he added.

Prime Mister Narendra Modi has placed significant emphasis on chipmaking as a key aspect of India’s economic strategy, aiming to usher in a “new era” in electronics manufacturing. Foxconn’s decision to withdraw from the joint venture deals a setback to Modi’s ambitions of attracting foreign investors to establish local chip production, marking a missed opportunity for India to venture into domestic chip manufacturing for the first time.

Vedanta, on the other hand, has not responded to a request for comment.

An earlier report by Reuters had reported the challenges faced by Modi’s plan, indicating that progress on the Vedanta-Foxconn project had been sluggish due to the impasse in talks to bring European chipmaker STMicroelectronics on board as a partner.

Vedanta-Foxconn had initially engaged STMicroelectronics for technology licensing. However, the Indian government expressed its preference for the European company to have a greater stake in the partnership, a demand that STMicroelectronics was reluctant to meet. Consequently, the negotiations remained in a state of uncertainty, as previously disclosed by a source.

(With inputs from Reuters)