Foxconn Technology Group has called off its joint venture with Vedanta to build semiconductors in India, the Taiwanese company said.
Foxconn and Anil Agrawal’s Vedanta had announced the venture to make chips and display panels in February last year under the government’s financial incentive scheme.
Shares of Vedanta were down 1.5% to Rs278 in intraday trading on Tuesday on BSE.
The government, however, downplayed the development saying that the move would not hinder India’s strategy to become a semiconductor manufacturing hub.
“Both the companies Foxconn and Vedanta are committed to India’s semiconductor mission and Make in India programme,” Ashwini Vaishnaw, minister for electronics and IT, tweeted.
Rajeev Chandrasekhar, minister of state for electronics and information technology, tweeted: “While their JV VFSL (Vedanta Foxconn Semiconductors Ltd) had originally submitted a proposal for 28nm fab, they could not source an appropriate tech partner. Vedanta recently submitted a 40nm fab proposal through VFSL and backed by a tech licensing agreement from a global semicon major, which is currently being evaluated by technical advisory group under the Indian Semiconductor Mission.”
“It’s not for the government to get into why or how two private companies choose to partner or choose not to, but…it means both companies can and will now pursue their strategies in India independently, and with appropriate technology partners in semicon and electronics,” Chandrasekhar added.
The Economic Times had reported on 26 June that the JV was on shaky ground and that Foxconn had started sounding out other Indian conglomerates as potential partners to further its chip-making ambitions.
There were major cultural differences in the approach of both the companies, it reported citing people aware of the developments.
India announced a $10 billion (₹76,000 crore) plan to boost semiconductor manufacturing in December 2021, with the government proposing incentives worth 50% of the project cost. In addition to these incentives, states where these plants would be located offered sops that took the total value of subsidies on offer to up to 75% of costs.
There has been a flurry of announcements under the India Semiconductor Mission in the past two weeks. Global chip maker Micron announced last month its intent to set up an outsourced assembly and testing plant at Sanand in Gujarat at about $2.75 billion.
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