Foxconn pulls out of chip JV with Vedanta
Taiwan's Foxconn has pulled out of its joint venture with Vedanta in India, which had planned to invest $20bn in semiconductor manufacturing
Taiwan’s Foxconn Technology Group on Monday pulled out of its joint venture with Vedanta Ltd, which had planned to invest $20 billion in India to build units for semiconductor fabrication, assembly and testing, and display manufacturing.
The partnership planned to set up India’s first chip manufacturing unit under a $10 billion government-backed financial incentive scheme and was once estimated to be ahead of two other consortia in the fray for getting the sops.
The government downplayed the development, saying the differences between the two companies did not impact India’s plans to become a semiconductor manufacturing destination.
“Both companies are fully committed to developing India’s semiconductor industry, and they’re fully committed to Make in India,” minister of electronics and information technology Ashwini Vaishnaw said, noting the announcements will not impact India’s semiconductor mission.
Rajeev Chandrasekhar, minister of state for electronics and information technology, tweeted that it was well-known that both companies had no prior experience or technology and were expected to source fab technology from a technology partner.
“While their joint venture VFSL (Vedanta Foxconn Semiconductors Ltd) originally submitted a proposal for a 28nm fab, they could not source an appropriate tech partner for that proposal. Vedanta, through VFSL, has recently submitted a 40nm fab proposal backed by a tech licensing agreement from a global semiconductor major, which is currently being evaluated by the tech advisory group under the Indian Semiconductor Mission,” the minister added.
Chandrasekhar noted that Foxconn and Vedanta, which had significant investments in India, will pursue their strategies in India independently and with appropriate technology partners in semiconductors and electronics.
The government officials’ remarks followed statements from the companies on Monday.
In a statement, the Taiwanese company said it was in the process of removing its name from the entity, which has been fully acquired by Vedanta Group under its holding company.
“Foxconn is working to remove the Foxconn name from what now is 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,” the world’s largest contract manufacturer said in a statement Monday.
“We will 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.
Last week, Vedanta added semiconductor and display glass ventures to its diversified portfolio under Volcan Investments Ltd, the ultimate holding company of Vedanta Ltd. The ventures will be wholly owned by the Agarwal family trust, which is not listed on the exchanges. The development followed the acquisition through a share transfer at face value of Twin Star Technologies Ltd’s semiconductor and display SPVs, a wholly owned subsidiary of Volcan Investments.
VFSL was a wholly owned subsidiary of Twin Star, whose special purpose vehicles had signed memorandums of understanding with the Gujarat government in September 2022 to set up the semiconductor and display fabs in Dholera.
Vedanta Group did not comment on the end of the joint venture but said it would go ahead with its plans to set up a semiconductor fab. It highlighted that it had procured a licence for producing 40 nm chips from an integrated device manufacturer without naming the company.
“We will shortly acquire a licence for production-grade 28 nm as well. Vedanta has redoubled its efforts to fulfil the Prime Minister’s vision for semiconductors, and India remains pivotal in repositioning global semiconductor supply chains,” the statement added.
The Vedanta-Foxconn JV was among three consortia that had submitted applications when the government first invited bids under its $10 billion semiconductor manufacturing programme in December 2021. Vedanta had announced its $20 billion ( ₹1.54 trillion) investment plan to set up a semiconductor chip and display manufacturing unit in Gujarat, including a display fab unit with an investment of ₹94,500 crore and an integrated semiconductor fab unit and OSAT (outsourced assembly and testing) facility with an investment of ₹60,000 crore. The semiconductor manufacturing fab unit would operate on 28nm technology nodes.
The International Semiconductor Consortium (ISMC) and Singapore’s IGSS Ventures were the other two consortia. ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, which is in the process of being acquired by Intel Inc. The ISMC consortium had signed an MoU with the Karnataka government for a $3 billion fabrication plant in Mysuru, where it has sought 150 acres at Kochanahalli industrial area.
Singapore-based IGSS Ventures Pvt. Ltd had signed a memorandum of understanding with the Tamil Nadu government in July last year for building a high-tech semiconductor park which includes a fab unit with an investment of $3.5 billion or ₹25,600 crore over six years.
In October, the Centre revised the financial incentives scheme, increasing subsidies from 30% to 50% of the project costs for semiconductor fabs across all technology nodes, display manufacturing, compound semiconductors, silicon photonics, sensors fab and semiconductor ATMP (assembly, testing, marking and packing) facilities or OSAT facilities. It had also removed the subsidy cap of ₹12,000 crore, which was there earlier. Both IGSS and ISMC are yet to reapply under the revised scheme, according to government officials.
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