Foxconn has announced its withdrawal from a $19.5 billion semiconductor joint venture with Vedanta, putting Indian Prime Minister Narendra Modi’s chipmaking ambitions in jeopardy. The collaboration, which planned to develop semiconductor and display plants in Gujarat, Modi’s home state, was considered as a significant step forward in India’s chip manufacturing push. Foxconn did not give specific reasons for the decision, but noted that it had collaborated with Vedanta for over a year to bring the semiconductor project to fruition before mutually opting to end the joint venture.
The deal’s demise is seen as a setback for Modi’s “Make in India” policy and his efforts to entice international corporations to set up chip manufacturing in India. The action by Foxconn raises questions regarding the feasibility of such ventures and reflects negatively on Vedanta. India has been attempting to strengthen its chipmaking capabilities, but has had difficulties in securing collaboration with European chipmaker STMicroelectronics in the Vedanta-Foxconn effort.
Despite the setback, the Indian government is still determined to attract chipmakers. Micron announced a large investment in a semiconductor testing and packaging plant in the nation earlier this month. The federal government of India and the state of Gujarat have also pledged significant investments. While three proposals for semiconductor facilities were submitted as part of a $10 billion incentive package, the Vedanta-Foxconn collaboration, as well as other ventures, have run into roadblocks, jeopardizing India’s aspirations to develop a robust domestic chip manufacturing business.
