TAIPEI/NEW DELHI (Reuters) – Taiwanese electronics manufacturer Foxconn announced on Tuesday its plan to seek incentives offered by India under its semiconductor manufacturing policy. This comes a day after the company ended its $19.5 billion chipmaking joint venture with Vedanta, a setback for Prime Minister Narendra Modi’s chipmaking plans.
In a statement, Foxconn, the world’s largest contract electronics maker, stated that it intends to apply under the government’s “Modified Programme for Semiconductors and Display Fab Ecosystem”. This reworked $10 billion plan provides financial incentives of up to 50% of capital costs for semiconductor and display manufacturing projects.
“Foxconn is working towards submitting an application,” the company stated. “Foxconn is committed to India and believes in the country’s ability to establish a robust semiconductor manufacturing ecosystem.”
Chipmaking has been a top priority for Modi’s economic strategy, as he aims to create a “new era” in electronics manufacturing. Foxconn’s decision to withdraw from the Vedanta joint venture deals a blow to his efforts to attract foreign investors for domestic chip production.
The Vedanta-Foxconn joint venture was one of three companies that applied for incentives under the government’s program last year.
Explaining the decision to end the partnership, Foxconn stated on Tuesday that “there was recognition from both sides that the project was not progressing quickly enough” and that there were “challenging gaps we were not able to smoothly overcome,” without providing further details.
“This is not a negative,” Foxconn clarified.
According to an anonymous source familiar with the matter, Foxconn is currently engaged in active discussions with various local and international partners to establish semiconductor production in India using mature chip manufacturing technology, particularly for electric vehicles.
“The company will continue to operate in India, but with different partners,” the source added.
The Indian government has stated that Foxconn’s decision will not impact its plans, emphasizing that both companies are “valued investors” in the country.
On Tuesday, Foxconn’s shares on the Taipei stock exchange closed up 0.5%, underperforming the broader market which ended 1.5% higher. Meanwhile, Vedanta Ltd shares fell by as much as 2.6% in Mumbai before recovering some losses.
(Reporting by Yimou Lee and Ben Blanchard in Taipei and Aditya Kalra in New Delhi; Editing by Jacqueline Wong and Sonali Paul)
Credit: The Star : Tech Feed
