Foxconn And Vedanta Part Ways: Micron Only Company To Build Semiconductor Manufacturing Plant In India?

In a substantial but presumably temporary setback to India's ambitious plan of manufacturing microchips for electronics, Foxconn has walked away from a multibillion-dollar joint venture with Indian oil and metal giant Vedanta.

Last year the Government of India praised Vedanta and Foxconn's upcoming semiconductor manufacturing plant in Gujarat as a landmark. However, less than a year after signing the historic MoU, with the state government in Gandhinagar, Foxconn is walking away from the partnership.

What Will Happen To The $19.5 Billion Semiconductor Manufacturing Plant?

Foxconn and Vedanta inked an agreement last year to build semiconductor and display production plants in Gujarat. The entire joint venture was supposed to be built with an investment of about ₹1.5 lakh crore.

However, in less than a year, Foxconn is pulling out of the partnership with Vedanta and nullifying the entire joint venture from its end. Speaking about the development, Foxconn said:

"In order to explore more diverse development opportunities, according to a mutual agreement, Foxconn has determined it will not move forward on the joint venture with Vedanta."

"Foxconn is confident about the direction of India's semiconductor development. We will continue to strongly support the government's 'Make In India' ambitions and establish a diversity of local partnerships that meet the needs of stakeholders."

Vedanta has assured that it continues to remain fully committed to its semiconductor project. The oil and metal giant even indicated that it has lined up other partners to set up India's first foundry.

"Vedanta reiterates that it is fully committed to its semiconductor fab project and we have lined up other partners to set up India's first foundry. We will continue to grow our Semiconductor team, and we have the license for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM),"

Why Did Foxconn Walk Away And What Will Happen To Its Other Operations in India?

Simply put, Vedanta will take the project forward with an as-yet-unannounced partner. Foxconn too will remain committed to its India operations. The Tawian-based giant has merely walked away from its partnership with Vedanta.

Some reports suggest Foxconn pulled out of the joint venture after the government raised questions over its application for an incentive scheme for chip production. However, the company may have been wary of Vedanta, which is reportedly reeling under a heavy debt load. Unconfirmed reports suggest Foxconn isn't confident Vedanta will be able to pay for acquiring the necessary technology for semiconductor manufacturing.

Foxconn has categorically mentioned that it is "working to remove the Foxconn name from what now is a fully-owned entity of Vedanta. Foxconn has no connection to the entity and efforts to keep its original name will cause confusion for future stakeholders." This clearly implies that Foxconn doesn't want to be associated with Vedanta.

Although Foxconn has stepped away, Vedanta has confirmed that it will move forward with the plant in Gujarat. This means that India could have two semiconductor manufacturing plants primarily because Micron hopes to start manufacturing microchips in India before 2024 ends. Incidentally, even Micron's plant will be in Gujarat.