Foxconn Withdraws From $19.5 Billion Chip Making Deal With Vedanta; Here’s What Happened

Taiwan’s tech manufacturing company Foxconn has reportedly dropped its $19.5 billion worth chip-making plan with Indian metals-to-oil conglomerate Vedanta. Both the companies had signed the pact last year to set up semiconductor and display production plants in Gujarat.

“Foxconn has determined it will not move forward on the joint venture with Vedanta,” Foxconn said in a statement, without elaborating reason. It further said that it had worked with Vedanta for more than a year  to bring “a great semiconductor idea to reality”.

According to the Foxconn statement, both the companies mutually agreed to end the joint venture. Both the companies have no prior semiconductor experience or technology, and were expected to source it from a technology partner, Union Minister Rajeev Chandrasekhar said.

Foxconn is known for assembling iPhones and other Apple products, but in recent years it has been expanding into chips to diversify its business.

ALSO READ: From Rs 500 Salary To Business Empire Worth Crores, The Rise of PSP Project Company's Prahlad Bhai Patel

Both companies struggling since May

As per several media reports, the joint venture was struggling since May this year to tie up with a technology partner as both Foxconn and Vedanta had no semiconductor experience.

Both the companies had onboarded STMicro for licensing technology. However, the Indian government made it very clear that it wants the European chipmaker to have "more skin in the game", such as a stake in the partnership, as per Reuters report.

Last month, Securities Exchange Board of India (SEBI) had fined Vedanta for breaching disclosure rules by publishing a press statement that made it appear it partnered with Foxconn to make semiconductors in India, however, the deal was with Vedanta's holding company.

Even as the partnership ended, Vedanta said it is committed to its semiconductor project and has lined up other partners to set up India's first foundry. 

PM Modi government has made chipmaking a top priority for India’s economic strategy in pursuit of a “new era” in electronics manufacturing. As per media reports, India’s semiconductor market is expected to touch $63 billion by 2026. Also, last year received three applications to set up plants under a $10 billion incentive scheme.