Taiwan’s Foxconn said on Monday it has withdrawn from a $19.5 billion semiconductor joint venture with Indian metals-to-oil conglomerate Vedanta, in a setback to Prime Minister Narendra Modi’s chipmaking plans for India.
Foxconn, the world’s largest contract electronics maker, and Vedanta signed a pact last year to set up semiconductor and display production plants in Modi’s home state of Gujarat.
“Foxconn has determined it will not move forward on the joint venture with Vedanta,” the electronics maker said in a statement, without elaborating on the reasons.
Foxconn said it had worked with Vedanta for more than a year to bring “a great semiconductor idea to reality”, but they had mutually decided to end the joint venture and it will remove its name from what now is a fully-owned Vedanta entity.
Modi has made chipmaking a top priority for India’s economic strategy in pursuit of a “new era” in electronics manufacturing and Foxconn’s move represents a blow to his ambitions of luring foreign investors to make chips locally for the first time.
Vedanta did not immediately reply to a request for comment.
Foxconn is best known for assembling iPhones and other Apple products, but in recent years it has been expanding into chips to diversify its business.
Reuters has previously reported that Modi’s plan was in trouble, with the Vedanta-Foxconn project proceeding slowly as their talks to involve European chipmaker STMicroelectronics as a partner were deadlocked.
Vedanta-Foxconn had got STMicro on board for licensing technology, but India’s government had made clear it wanted the European company to have more “skin in the game”, such as a stake in the partnership.
STMicro was not keen on that and the talks remained in limbo, a source had previously said.
India, which expects its semiconductor market to be worth $63 billion by 2026, last year received three applications to set up plants under a $10 billion incentive scheme.
These were from the Vedanta-Foxconn joint venture, a global consortium ISMC which counts Tower Semiconductor as a tech partner and from Singapore-based IGSS Ventures.
The $3 billion ISMC project has stalled too due to Tower being acquired by Intel, while another $3 billion plan by IGSS was also halted as the firm wanted to re-submit its application.