Apple Supplier Foxconn Drops Out of $19.5B India Factory Plan

Foxconn, a supplier for Apple, has withdrawn from a substantial $19.5bn (£15.2bn) agreement with Vedanta, an Indian mining giant, that was intended to construct a chip manufacturing plant in India.

This decision comes not even a year after the two entities declared their intentions to establish the facility in Gujarat, the home state of Indian Prime Minister Narendra Modi.

Many experts believe this signifies a blow to the country’s objectives in the technology sector.

Contrarily, a cabinet minister has stated that this decision won’t affect the nation’s aspirations to produce chips.

Foxconn, headquartered in Taiwan, reported to the BBC that it will now “explore more diverse development opportunities”.

The company also indicated that the decision to withdraw was a “mutual agreement” with Vedanta, which now possesses complete control of the venture, although they didn’t disclose the reasons behind this move.

“We will continue to strongly support the government’s ‘Make in India’ ambitions and establish a diversity of local partnerships that meet the needs of stakeholders,” Foxconn further added.

Vedanta, based in New Delhi, announced it had “lined up other partners to set up India’s first [chip] foundry”.

“The surprise pull-out of Foxconn is a considerable blow to India’s semiconductor ambitions,” expressed Paul Triolo of the international advisory firm Albright Stonebridge Group.

“The apparent cause of the pull-out is the lack of a clear technology partner and path for the joint venture,” he expanded. “Neither party had significant experience with developing and managing a large-scale semiconductor manufacturing operation.”

Rajeev Chandrasekhar, India’s Minister of State for Electronics and Information Technology, however, tweeted that Foxconn’s decision had “no impact on India’s semiconductor fab[rication] goals. None.”

Chandrasekhar further stated that Foxconn and Vedanta were “valued investors” in India and “will now pursue their strategies in India independently”.

The government of India has been formulating strategies to bolster the chipmaking industry.

The previous year, it established a $10bn fund to draw more investors to this sector, aiming to decrease dependence on foreign chipmakers.

Prime Minister Modi’s flagship ‘Make in India’ campaign, introduced in 2014, aims to transform India into a global manufacturing powerhouse to compete with China.

In the past few years, numerous companies have announced their plans to build semiconductor factories in India.

Just a month ago, Micron, the US memory chip behemoth, declared its intention to invest up to $825m to construct a semiconductor assembly and testing facility in India.

Micron announced that the construction of the new establishment in Gujarat will start this year. The project is expected to directly create approximately 5,000 positions and potentially 15,000 additional jobs in the vicinity.