Taiwan’s Foxconn Technology has decided to end its partnership with India-focused resources conglomerate Vedanta to manufacture chips, dealing a blow to India’s ambitions of becoming a semiconductor manufacturing hub. The collaboration, valued at nearly $20 billion, aimed to establish a chip plant in Gujarat, the home state of Prime Minister Narendra Modi. Despite this setback, an Indian government official assured that the move would not hinder the country’s semiconductor manufacturing plans. Neil Shah, Vice President of Research at Counterpoint Research puts forth the notion that the project’s apparent failure could be a fortunate turn of events in disguise for India.
Foxconn withdraws from joint venture with Vedanta
Foxconn, also known as Hon Hai Precision Industry, announced the termination of its joint venture with Vedanta to explore diverse development opportunities. The contract manufacturer, a key supplier to Apple, cited mutual agreement as the reason behind the decision. Foxconn is actively working to disassociate itself from the project, which is now under Vedanta’s sole ownership. In response, Vedanta affirmed its commitment to establish India’s first foundry and fulfill Prime Minister Modi’s vision for semiconductors. The company has obtained a license from a prominent chip maker to manufacture larger, more established chips.
Indian government remains undeterred in semiconductor ambitions
India’s junior tech minister, Rajeev Chandrasekhar, reassured the public that the dissolution of the Foxconn-Vedanta joint venture would not impact the country’s chip-making plans. He emphasized that India was only at the beginning of its journey and reaffirmed the government’s determination to achieve its semiconductor fabrication goals. Chandrasekhar’s statement comes in the wake of Micron Technology’s announcement during Prime Minister Modi’s U.S. visit, where the largest U.S. memory-chip manufacturer committed to investing over $800 million in a semiconductor facility in Gujarat.
The minister acknowledged that the Foxconn-Vedanta collaboration faced challenges in securing a tech partner with the necessary expertise to produce the desired chip types. Given that both companies were newcomers to the semiconductor industry, experts believe their lack of experience presented a significant hurdle for the joint venture from the outset. Neil Shah, Vice President of Research at Counterpoint Research, noted that industry buy-in was lacking due to the participants’ inexperience in chip manufacturing.
Shah believes that there are yet unforeseen possibilities and unique opportunities for alternative ventures. With a strategic mindset, he proposed a paradigm shift in India’s incentives program, urging a concentrated emphasis on reputed and well-established semiconductor giants such as Micron. He emphasized the paramount importance of the government undertaking meticulous and exhaustive due diligence in order to ensure the success and longevity of any potential collaboration. By meticulously examining the prospective partners’ track record, technological capabilities, and market positioning, the government could safeguard its interests and steer the course of the semiconductor industry in the most advantageous direction.
The termination of the Foxconn-Vedanta chip venture deals a setback to India’s aspirations of becoming a semiconductor manufacturing hub. Government officials maintain their commitment to the country’s chip-making plans, emphasizing that this development will not impede India’s long-term goals. The dissolution of the joint venture provides an opportunity to reassess and align future initiatives with experienced semiconductor players. As India’s journey in the semiconductor industry unfolds, it remains crucial to prioritize collaborations that can propel the country’s technological advancements.
