Foxconn Drops Vedanta Chip JV After a Year of Delays and Disputes

Foxconn, the world’s largest contract electronics manufacturer, has dropped its joint venture with Vedanta to make semiconductors in India, after a year of delays and disputes over technology and funding.

The Taiwanese company had announced in February 2022 that it would partner with Vedanta, an Indian metals-to-oil conglomerate, to set up semiconductor and display production in India, in a bid to diversify its business and tap into the growing demand for electronics in the country.

The joint venture was hailed as “a significant boost to domestic manufacturing of electronics in India” by Foxconn, and was expected to attract an investment of $19.5 billion. The two companies had signed pacts in September 2022 to set up the facilities in Gujarat, the home state of Prime Minister Narendra Modi, who has been pushing for self-reliance in key sectors.

However, the project soon ran into trouble as Vedanta and Foxconn struggled to tie up with a technology partner. Reuters reported in May 2023 that the joint venture was proceeding slowly as talks to involve STMicroelectronics, a European chipmaker, were deadlocked.

Vedanta and Foxconn had got on board STMicro for licensing technology, but India’s government had made clear it wanted the European chipmaker to have “more skin in the game”, such as a stake in the partnership, a source with direct knowledge of the matter said.

The source added that Vedanta’s chairman Anil Agarwal, who had said in September 2022 that he did not see any funding problems for the joint venture, was reluctant to dilute his stake or share control with another partner.

The joint venture also faced regulatory hurdles as India’s market regulator fined Vedanta for breaching disclosure rules by publishing a press release that made it appear it had partnered with Foxconn to make semiconductors in India, as the deal was with Vedanta’s holding company.

On July 10, 2023, Foxconn announced that it had dropped the joint venture with Vedanta, without specifying a reason. “Foxconn has determined it will not move forward on the joint venture with Vedanta,” it said, saying it had worked for more than a year on the project but the two sides had mutually decided to end the JV.

The move is a setback for India’s ambitions to become a global hub for semiconductor manufacturing, as it faces a shortage of chips amid a surge in demand for smartphones, laptops and other electronic devices. India currently imports most of its chips from China, Taiwan and South Korea.

Foxconn, which is best known for assembling iPhones for Apple, has been expanding its presence in India, where it operates several factories that make smartphones and other devices for various brands. The company said it remains committed to investing and growing in India.