Foxconn, the world’s largest contract electronics maker, has withdrawn from a $19.5 billion semiconductor joint venture with Indian metals-to-oil conglomerate Vedanta. This decision comes as a setback to Prime Minister Narendra Modi’s chipmaking plans for India.
Last year, Foxconn and Vedanta signed a pact to establish semiconductor and display production plants in Gujarat. The joint venture aimed to create more than 50,000 job opportunities and position India as a global hub for chip manufacturing.
However, on Monday, Foxconn announced that it had chosen to terminate the joint venture without providing a specific reason. It is likely that the increasing costs of chipmaking and the global chip shortage played a role in this decision.
In response, Vedanta expressed its commitment to the semiconductor project and stated that it has secured alternative partners. Nevertheless, the departure of Foxconn deals a significant blow to India’s chipmaking aspirations.
Here are some of the possible reasons why Foxconn pulled out of the deal:
- The rising costs of chipmaking. The cost of building a semiconductor plant has increased significantly in recent years, due to factors such as the global chip shortage and the war in Ukraine.
- The global chip shortage. The global chip shortage has made it difficult for companies to get the chips they need, which has hurt their profits. This may have made Foxconn less willing to invest in a new chipmaking plant.
- The lack of government support. The Indian government has not provided as much support for the chipmaking industry as some other countries, such as the United States and China. This may have made Foxconn less confident in the future of the Indian chipmaking industry.
