In a setback to Prime Minister Narendra Modi’s vision of developing India’s chipmaking industry, Taiwan-based Foxconn announced on Monday that it has pulled out of a $19.5 billion joint venture with Indian conglomerate Vedanta. The joint venture aimed to establish semiconductor and display production plants in Gujarat, Modi’s home state.
Foxconn did not provide a specific reason for its decision but stated that it will no longer proceed with the joint venture with Vedanta. Additionally, the company is working on removing its name from the entity, which will now be fully owned by Vedanta, according to Foxconn’s statement.
Modi has prioritized chipmaking as a key element of India’s economic strategy, aiming to propel the country into a “new era” of electronics manufacturing. However, Foxconn’s withdrawal deals a blow to the government’s ambitions of attracting foreign investors to manufacture chips within India’s borders for the first time.
Vedanta, the Indian metals-to-oil conglomerate, has yet to provide a response regarding Foxconn’s decision.
Earlier reports from Reuters indicated that Modi’s chipmaking plan was facing difficulties, with the Vedanta-Foxconn project progressing slowly. Talks to involve European chipmaker STMicroelectronics as a partner had reached a deadlock.
The Vedanta-Foxconn joint venture had initially secured STMicro as a technology licensor. However, the Indian government expressed a desire for STMicro to have a more significant role and stake in the partnership, pushing for greater involvement and investment. The talks remained in limbo as STMicro showed reluctance to meet these demands, according to previous sources.
The collapse of the deal highlights the challenges and complexities involved in establishing a thriving chipmaking industry in India. Modi’s government will now need to reassess its strategy and explore alternative avenues to attract foreign investors and promote domestic chip production.
As the global demand for electronic chips continues to surge, many countries are actively seeking to bolster their chip manufacturing capabilities. India’s aspirations to become a major player in this industry face a setback with Foxconn’s withdrawal, emphasizing the need for effective collaboration and favorable conditions to attract international chipmakers to invest in the country.
The Indian government may need to reassess its policies and engagement strategies to ensure a conducive environment for chipmaking investment, addressing concerns and barriers that deter potential partners from participating in such ventures.
As the landscape of the semiconductor industry evolves, India’s pursuit of chipmaking remains a critical aspect of its economic growth plans, necessitating a thorough evaluation and recalibration to achieve success in this crucial sector.
Sources By Agencies