Foxconn eyes incentives under India's chip scheme after withdrawing from $19.5bn semiconductor deal

A day after pulling out of a joint venture deal with Indian conglomerate Vedanta, Taiwan's Foxconn released a statement saying that it plans on applying for incentives under India's semiconductor manufacturing plan.

Foxconn, on Monday, pulled out of the JV with Indian metals-to-oil conglomerate Vedanta.

Last year, Vedanta and Foxconn had signed an agreement to invest $19.5 billion to set up semiconductor and display production plants in western Gujarat state in a bid to help India become a major electronics hub.

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In a statement on Monday, the company said it is working to remove the Foxconn name from the joint venture which is now a fully-owned entity of Vedanta.

"Foxconn has no connection to the entity and efforts to keep its original name will cause confusion for future stakeholders," Hon Hai Technology Group (Foxconn) said.

It said that for over a year, the Taiwanese company and Vedanta have been working hard to bring a great semiconductor idea to reality.

“It has been a fruitful experience that can position both companies strongly going forward.”

“In order to explore more diverse development opportunities, according to a mutual agreement, Foxconn has determined it will not move forward on the joint venture with Vedanta,” it said.

The electronics giant on Tuesday said that it was working towards applying under India's Modified Programme for Semiconductors and Display Fab Ecosystem, a $10 billion plan proposing incentives of up to 50 per centof capital costs for semiconductor and display manufacturing projects.

"We have been actively reviewing the landscape for optimal partners," it said in a statement. "Foxconn is committed to India and sees the country successfully establishing a robust semiconductor manufacturing ecosystem."

Foxconn split, a setback to PM Modi's chipmaking plans for India

Foxconn's split with Vedanta is a setback for Indian Prime Minister Narendra Modi who made chipmaking a top priority in quest of a "new era" in electronics manufacturing. Modi lauded the JV last year as an "important step" in revving India's semiconductor manufacturing initiatives.

As per news agency Reuters reports, the company is in talks with several local and international partners to make semiconductors in India using mature chip manufacturing technology for products including EVs, two people with knowledge of the matter said, requesting anonymity.

"The company will continue to be there, just that it will find other partners," one of the people said.

Elucidating the reason behind the separation, Foxconn said, "There was recognition from both sides that the project was not moving fast enough" and there were other "challenging gaps we were not able to smoothly overcome."

"This is not a negative," Foxconn added.

(With inputs from agencies)

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