Global manufacturing giant Foxconn has withdrawn from a semiconductor joint venture with Indian conglomerate Vedanta.
Foxconn and Vedanta signed a pact in September last year to set up a US$19.5 billion (S$25.21 billion) semiconductor and display unit in the Indian state of Gujarat.
Separately the Taiwanese company was also in "serious talks" with the state of Karnataka to set up another semiconductor manufacturing project in India.
There remains some confusion as to the status of the project in Karnataka as, according to media reports, the company has signed a "letter of intent" to establish semiconductor manufacturing with both Karnataka and the adjoining state of Telangana.
Another report says the company is in discussions with the Indian government to set up a semiconductor plant on its own, and without any government incentives.
For the JV with Vedanta, according to top officials, Foxconn was supposed to bring technical expertise to the venture while Vedanta, with a background in mining, would finance the project.
Foxconn said the two companies had mutually decided to end the joint venture and it will remove its name from what would now be a fully-owned Vedanta entity.
"Foxconn has determined it will not move forward on the joint venture with Vedanta," the company said in a statement, without revealing any reasons.
Challenges
The JV initially applied for incentives from the Indian government for a 28 nm chip manufacturing plant in January 2022.
The project moved slowly as Foxconn's plans to bring in either the Netherlands-based STMicroelectronics or GlobalFoundries as technology partners remain deadlocked.
India's minister of state for electronics and IT Rajeev Chandrasekhar said that it was "well known" that both companies had no prior semicon experience or technology expertise and they were expected to source fab tech from a tech partner.
"While they had originally submitted a proposal for 28nm fab, they could not source an appropriate tech partner for that proposal," he tweeted.
The proposed venture has again submitted a revised 40nm fab proposal backed by tech licensing agreement from a Global Semicon major and is currently being evaluated, Chandrasekhar said.
He added that Foxconn's decision to withdraw from its JV with Vedanta will have no impact on the country's semiconductor fab goals.
"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," he said.
More recently, the US chip maker Micron announced to invest up to US$825 million (S$1.1 billion) in setting up an assembly and test facility in Gujarat.
The government has also given approvals for five companies under the Design-Linked Incentive (DLI) scheme to design chips, including one for satellite communication and one for beam formation.
