Science & Technology

Foxconn Pulls Out of $19 Billion Chipmaking Project in India

Foxconn announces the termination of participation in the implementation of a large-scale project to build a chip manufacturing plant in India, which is the first factory of this profile in this country.

Foxconn Pulls Out of $19 Billion Chipmaking Project in India

On Monday, July 10, the company announced that it no longer has any intentions to move forward in the framework of a joint venture with the Indian metallurgical and energy conglomerate Vedanta (VEDL) worth $19.4 billion. Many experts described this statement by the world’s largest contract electronics manufacturer as a significant obstacle to the implementation of the Indian government’s plans to create a world-class high-tech production infrastructure in the country. Officials did not agree with this opinion about the impact of the termination of the project on their intentions in the technology sector.

Foxconn, which is one of the leading suppliers of components for Apple, commenting on its decision to complete the process of interaction with the Indian energy and metallurgical conglomerate, said that the principle of mutual consent was applied in this case. The Taiwanese electronics manufacturer also noted that the rejection of the project for him means the possibility of considering a broader list of development strategies. The Indian joint factory will now be wholly owned by Vedanta. What kind of future awaits the plant in the new realities, it is impossible to predict yet.

At the same time, Foxconn has not abandoned plans to invest in the technology sector of India to develop chip production. On Tuesday, July 11, the company announced its intention to apply for participation in the state program, which provides subsidies for the creation of Indian facilities for the production of semiconductors and electronic displays.

Foxconn states that the creation of a new factory in a previously undeveloped region in terms of business is a difficult task, but the company is ready to invest in the relevant activities.

Commenting on the joint project with Vedanta, the electronics manufacturer notes that the implementation of this business initiative showed slow dynamics and was associated with internal problems, the smooth overcoming of which proved impossible, and the influence of external factors of a negative nature.

Foxconn and its Indian partner announced their intention to jointly build a semiconductor plant in February last year. Initially, it was assumed that as a result of the implementation of this project, a certain base would be created for a broader ecosystem of manufacturers focused on products of these segments.

Indian Prime Minister Narendra Modi wrote on his Twitter page last September that the total amount of investments aimed at the construction of a joint plant is 1.54 trillion rupees, which as of the beginning of autumn 2022 was equivalent to $19.4 billion.

Foxconn last year reported on the active search for a place for construction and on holding relevant discussions with the leadership of several regions of India. The company’s CEO Young Liu has been actively interacting with Indian partners over the past few months. The desire of the electronics manufacturer to establish operations in India is partly a manifestation of the global trend, which consists of the pursuit of multinational corporations to diversify supply chains beyond China.

On Monday, July 10, Indian Minister of Electronics and Information Technology Ashwini Vaishnaw announced that Vedanta and Foxconn are fully committed to the country’s mission in the field of semiconductors.

Rajeev Chandrasekhar, India’s Minister of State for Electronics and Information Technology, wrote on his Twitter page that the refusal of the Taiwanese company to participate in the plant construction project does not change anything in terms of the country’s goal-setting regarding the development of semiconductor production. Separately, he noted that both firms can continue to independently implement their strategies in India.

Foxconn shares rose 1.3% in Taipei after the announcement of the termination of participation in the project. Vedanta shares fell 1.4% in Mumbai on the back of this news.

Currently, well-known technology companies are showing interest in India as a space for the development of production. For example, in June, the American manufacturer of microchips Micron announced the construction of a new plant in the western Indian state of Gujarat. The company will invest up to $825 million in this project.

As we have reported earlier, Apple Partner Foxconn to Invest $500 Million in India’s Telangana.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.