Hong Kong CNN –
Foxconn says it is completing an ambitious project that will help build one of India’s first chip factories.
The world’s largest contract electronics manufacturer will “no longer advance” its $19.4 billion joint venture with Vedanta (VEDL), an Indian metals and energy group, in Asia’s third-largest economy, it said on Monday.
The news was taken as a blow to the Indian government’s plans to turn the country into a powerhouse of tech production, though officials have tried to counter that view.
In a statement to CNN, Foxconn, a Taiwanese tech giant best known for being one of Apple’s top suppliers (AAPL), said the decision was based on “mutual agreement” and allowed the company to “explore more diverse development opportunities.” .
The joint venture will now be fully owned by Vedanta.
in one Subsequent Statement On Tuesday, Foxconn reiterated its commitment to invest in Indian chip manufacturing and said it would apply for a government program that would subsidize the cost of setting up semiconductor or electronic display manufacturing plants in the country.
“Building factories in a new region is challenging, but Foxconn is committed to investing in India,” the company said, referring to manufacturing facilities, the technical term for semiconductor factories.
“Both sides recognized that the project was not progressing fast enough, that there were difficult gaps that we could not fill smoothly, as well as external issues unrelated to the project,” it said.
Since announcing the deal in February 2022, Foxconn said it had been working with Vedanta on plans to build a semiconductor fab in the country that would support a broader ecosystem for manufacturers.
He did not give an investment figure for the plant, but from Indian Prime Minister Narendra Modi tweeted in September that the total investment would be Rs.1.54 trillion, which was equivalent to US$19.4 billion at the time.
Foxconn said last year it was actively seeking locations for the plant and had discussions with “some state governments.”
Foxconn CEO Young Liu has been courting Indian partners in recent months after traveling there in February to look for new cooperation partners.
The company, which already has factories in the Indian states of Andhra Pradesh and Tamil Nadu, is one of many global tech companies looking for opportunities in the country, especially as multinationals look to diversify their supply chains beyond China.
On Monday, Indian Electronics and Information Technology Minister Ashwini Vaishnaw told Indian news agency and CNN affiliate News18 that both Vedanta and Foxconn are “fully committed to India’s semiconductor mission.”
Also Rajeev Chandrasekhar, the country’s Minister of State for Electronics and IT tweeted that the news “does not change” India’s semiconductor manufacturing goals, adding that the decision “would continue to enable both companies to pursue their strategies independently in India.”
The project has been hailed as a milestone in India’s campaign to mobilize more investment in manufacturing, a sector badly needed to help reduce unemployment.
Prime Minister Modi described the project as a significant boost for the economy and jobs.
Foxconn shares rose 1.3% in Taipei on Tuesday after the announcement, while shares in Mumbai-based Vedanta fell 1.4%. The latter did not respond to a request for comment.
Other big-name tech companies have recently taken steps to expand their manufacturing in India.
Last month, US chipmaker Micron (MICR) announced the opening of a new factory in the western state of Gujarat, calling it the country’s first semiconductor assembly and test manufacturing facility.
The company envisages Micron investing up to $825 million and creating “up to 5,000 new direct Micron jobs and 15,000 community jobs” over the next few years, according to the company.