Apple supplier Foxconn has decided to pull out of a $19.5 billion (£15.2 billion) deal with Indian mining giant Vedanta to construct a chip making plant in India. This move comes less than a year after the companies initially announced their plans to establish the facility in Prime Minister Narendra Modi’s home state of Gujarat.
The decision by Foxconn to withdraw from the deal is seen by some analysts as a setback to India’s technology industry goals. However, a government minister has stated that it will not have an impact on the country’s ambitions in chip manufacturing.
Foxconn, headquartered in Taiwan, informed the BBC that it will now explore other diverse development opportunities. The company mentioned that the decision was made in mutual agreement with Vedanta, which has taken full ownership of the project. However, specific details about the reasons for Foxconn’s withdrawal from the deal were not provided.
Foxconn further stated, “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, based in New Delhi, announced that it has lined up alternative partners to proceed with the establishment of India’s first chip foundry.
The withdrawal of Foxconn from this major deal has raised concerns about the progress of India’s technology industry. However, efforts will continue to achieve the nation’s ambitions in chip manufacturing through alternative partnerships and initiatives.
“The surprise pull-out of Foxconn is a considerable blow to India’s semiconductor ambitions,” Paul Triolo from global advisory firm Albright Stonebridge Group told the BBC.
“The apparent cause of the pull-out is the lack of a clear technology partner and path for the joint venture,” he added. “Neither party had significant experience with developing and managing a large-scale semiconductor manufacturing operation.”
Foxconn, an Apple supplier, has decided to pull out of a $19.5 billion deal with Vedanta, an Indian mining giant, to construct a chip making plant in India.
While concerns were raised about the impact on India’s semiconductor fabrication goals, Rajeev Chandrasekhar, India’s Minister of State for Electronics and Information Technology, took to Twitter to clarify that Foxconn’s decision would not hinder these goals.
He emphasized that Foxconn and Vedanta remain valued investors in India and would independently pursue their strategies in the country.
To support the chipmaking industry, the Indian government has implemented various strategies, including the creation of a $10 billion fund aimed at attracting more investors to reduce reliance on foreign chipmakers.
Prime Minister Narendra Modi’s flagship “Make in India” initiative, launched in 2014, seeks to transform the nation into a global manufacturing hub, rivalling China.
Despite Foxconn’s withdrawal, other companies have shown interest in building semiconductor factories in India. Just last month, US memory chip giant Micron announced plans to invest up to $825 million in constructing a semiconductor assembly and test facility in Gujarat.
The project is expected to create approximately 5,000 direct jobs and another 15,000 jobs in the region, further bolstering India’s chip manufacturing capabilities.