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Published: July 11, 2023
Updated: July 11, 2023

Foxconn Withdraws from Semiconductor Joint Venture with Vedanta Ltd, Impacts India's Electronics Industry

In a surprising move, Foxconn Technology Group, a Taiwanese electronics manufacturer, has announced its withdrawal from a joint venture with Vedanta Ltd, a metals-to-oil conglomerate. The joint venture aimed to establish semiconductor and display production plants in Gujarat, with an investment of $19.5 billion. However, several challenges, including failed partnership talks with European chipmaker STMicroelectronics and regulatory issues, hindered the project's progress. As a result, Foxconn has decided to remove its name from the venture, which is now fully owned by Vedanta. This development has significant implications for India's ambition to become a major player in the electronics industry.

Slow Progress and Partnership Deadlock:

Despite the initial investment pact between Foxconn and Vedanta, the project faced sluggish progress. Talks to bring in STMicroelectronics as a partner hit a deadlock, leading to delays and uncertainties. Last month, Reuters reported on the project's slow pace and the challenges in finalising the partnership. These setbacks contributed to the eventual withdrawal of Foxconn from the joint venture.

Regulatory Issues and Penalties:

Vedanta's handling of the project also came under scrutiny. Initially, the company's disclosures gave the impression that it was leading the project. However, it later clarified that Volcan Investments, Vedanta's holding company, would take charge. The Indian market regulator conducted an investigation and penalised Vedanta for violating regulations by misleadingly suggesting a partnership with Foxconn. This penalty further complicated the situation and added to the project's uncertainties.

Vedanta's Acquisitions and India's First Integrated Semiconductor and Display Fab Business:

In response to Foxconn's withdrawal, Vedanta announced its takeover of the joint venture with Foxconn and a display glass manufacturing venture from Volcan Investments. As a result, Vedanta, through its subsidiary Twin Star Technologies, will become India's first company to establish an Integrated Semiconductor and Display Fab Business. The acquisition involves the transfer of shares at face value, as approved by the Board of Directors.

Foxconn's withdrawal from the semiconductor joint venture with Vedanta Ltd deals a blow to India's ambitions of becoming a major player in the electronics industry. The project faced multiple hurdles, including partnership deadlock and regulatory penalties. However, Vedanta's acquisition of the joint venture and display glass manufacturing venture opens new possibilities for the company to establish an integrated business in semiconductors and display fabrication. The future of the project and its impact on India's electronics sector remain uncertain, but Vedanta's determination to move forward signals potential opportunities for growth and innovation in the country.