Foxconn to apply for chipmaking incentives after quitting $19.5 bn joint venture with Vedanta

Explaining its breakup with Vedanta, Foxconn said Tuesday ‘there was recognition from both sides that the project was not moving fast enough’ and there were other ‘challenging gaps.’

A wafer on display as Taiwan's Foxconn holds its annual shareholder meeting in New Taipei City, Taiwan | File Photo: Reuters

Taipei/New Delhi: Taiwan’s Foxconn said on Tuesday it plans to apply for incentives that India is offering under its semiconductor manufacturing policy, a day after the company parted ways with Vedanta on a $19.5 billion chipmaking joint venture.

Foxconn withdrew from its semiconductor JV with Indian metals-to-oil conglomerate Vedanta on Monday, in a setback to Prime Minister Narendra Modi’s chipmaking plans for India.

In a statement, Foxconn, the world’s largest contract electronics maker, said it was working towards applying under the government’s “Modified Programme for Semiconductors and Display Fab Ecosystem”, a reworked $10 billion plan offering financial incentives of up to 50% of capital costs for semiconductor and display manufacturing projects.

“Foxconn is working toward submitting an application,” the company said in a statement. “Foxconn is committed to India and sees the country successfully establishing a robust semiconductor manufacturing ecosystem,”

Modi has made chipmaking a top priority for India’s economic strategy in pursuit of a “new era” in electronics manufacturing and Foxconn’s move represents a blow to his ambitions of luring foreign investors to make chips locally for the first time.

The Vedanta-Foxconn joint venture was among three applicants last year under the government’s incentives plan.

Explaining its breakup with Vedanta, Foxconn said on Tuesday “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”, without sharing more details.

“This is not a negative,” Foxconn said in the statement.

Foxconn is in active talks with several local and international partners to build up semiconductor production in India using mature chip manufacturing technology for products including electric vehicles, according to a person with direct knowledge of the matter who requested anonymity due to the sensitive nature of the issue.

“The company will continue to be there, just that it will find other partners,” the person said.

The Indian government has said Foxconn’s decision had “no impact” on India’s plans, adding that both companies were “valued investors” in the country.

Foxconn’s Taipei listed shares closed up 0.5% on Tuesday, underperforming the broader market which ended up 1.5%. Vedanta Ltd shares fell as much as 2.6% in Mumbai, before paring some losses.

(Reporting by Yimou Lee and Ben Blanchard in Taipei and Aditya Karla in New Delhi; Editing by Jacqueline Wong and Sonali Paul)

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