Forbes India 15th Anniversary Special

Foxconn bids adieu to Vedanta, but it's still hello India

The Hon Hai Technology Group issued a fresh statement on July 11, stating it looks forward to growing alongside India's nascent semiconductor industry

Naandika Tripathi
Published: Jul 11, 2023 02:05:26 PM IST
Updated: Jul 11, 2023 02:17:07 PM IST

Foxconn bids adieu to Vedanta, but it's still hello India for the Taiwanese manufacturer. Image: ShutterstockFoxconn bids adieu to Vedanta, but it's still hello India for the Taiwanese manufacturer. Image: Shutterstock

After announcing its decision to not proceed with the joint venture with Vedanta to manufacture semiconductor chips in India, Foxconn reiterated that it is committed to India and sees the country successfully establishing a robust semiconductor manufacturing ecosystem. “It will take time. Foxconn first entered India in 2006, and we are still here. The Group looks forward to growing alongside India's nascent semiconductor industry,” the company said in a statement.

Foxconn withdrew from its pact with Vedanta to invest $19.5 billion to set up a semiconductor plant in the country. The move comes less than a year after the companies announced plans to set up the facility in Gujarat. Prime Minister Narendra Modi at that time called the project “an important step” in boosting India's chipmaking ambitions.

The latest development sparked mixed reactions. Some said it was a setback for the nation's technology industry goals. However, government ministers confirmed on Twitter that it would have no impact on the country's chip-making ambitions.

“It’s not for the government to get into why or how two private companies choose to partner or choose not to, but in simple terms, it means both companies can and will now pursue their strategies in India independently and with appropriate technology partners in semiconductors and electronics,” said Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, while reacting to Forbes India’s tweet.

“Foxconn has sound channels of communication with government stakeholders across India, and we have been consistent and clear with them at all levels about our continued commitment to invest in India,” Foxconn said in a statement.

Taiwan’s Foxconn, a major Apple supplier and the world's largest contract electronics maker, has been attempting to break into making chips as it seeks to branch out and expand into the electric vehicle market. The company also shared a detailed reason for parting ways with Indian mining giant Vedanta. “Both parties mutually agreed to part ways. This is not a negative. There was recognition from both sides that the project was not moving fast enough, there were challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project,” the company stated.

“When Foxconn course corrects, it is done only after heavy considerations on the near-term impact to the stakeholders, and on the long-term corporate health to the Group. Building fabs from scratch in a new geography is a challenge, but Foxconn is committed to invest in India. We have been working on challenges like this since the 1980s. Foxconn has no intention to do anything but continue to strongly support the government's ‘Make In India’ ambitions and establish a diversity of local partnerships that meet the needs of stakeholders,” it added.

Vedanta said it is fully committed to its semiconductor project and has lined up other partners to set up India’s first foundry. “Vedanta has redoubled its efforts to fulfil the Prime Minister's vision for semiconductors, and India remains pivotal in repositioning global semiconductor supply chains,” a spokesperson from Vedanta said in a statement.

In 2022, the Indian government created a $10-billion fund to attract more investors to the chipmaking industry in a bid to become less dependent on foreign chipmakers. In recent years, many other firms have announced plans to build semiconductor factories in India. In June, US-based Micron Technology said it would invest up to $825 million to build a semiconductor assembly and test facility in India. Micron said the construction of the new facility in Gujarat will begin this year.

For now, Foxconn is working towards submitting an application related to the ‘Modified Programme for Semiconductors and Display Fab Ecosystem’. “We have been actively reviewing the landscape for optimal partners. We welcome a diverse set of stakeholders, both inside India and abroad, who also want to see India get to the next level and can complement Foxconn's world-class supply chain management and manufacturing efficiency,” Foxconn said in the statement.