Foxconn to apply afresh for chipmaking incentives after pulling the plug on $19.5 bn JV

A day after it withdrew from a $19.5 billion semiconductor joint venture with mining baron Anil Agarwal's Vedanta Ltd, Foxconn said, on Tuesday, it plans to apply for incentives that India is offering under its semiconductor manufacturing policy, which is a $10 billion plan offering incentives of up to 50% of capital costs for semiconductor and display manufacturing projects.

“Foxconn is working towards submitting an application related to “Modified Programme for Semiconductors and Display Fab Ecosystem,” the company said in response to a query on the future plans of the company.

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The world's largest contract electronics maker said it is in talks with several local and international partners to set up semiconductor manufacturing in India using mature chip manufacturing technology. "We have been actively reviewing the landscape for optimal partners," the company said in its press statement.

The Foxconn statement added that the company welcomes a diverse set of stakeholders, both in India and abroad, who also want to see India get to the next level and can complement Foxconn’s world-class supply chain management and manufacturing efficiency.

Explaining the Vedanta split, Foxconn said "There was recognition from both sides that the project was not moving fast enough, there were challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project.”

"Both parties mutually agreed to part ways. This is not a negative," Foxconn further added.

Sources close to the matter had informed DH that delayed incentive approvals were one of the reasons for the pullout. Another potential reason for the split was the deadlocked talks on finalising European chipmaker STMicroelectronics as a technology partner of the Vedanta-Foxconn JV.

The country expects its semiconductor market to touch $63 billion by 2026. Recently, American chipmaker Micron Technology announced that it would invest up to $825 million in a new chip assembly and test facility in Gujarat.

Last year, the government received three applications to set up plants under its incentive scheme. After reworking the semiconductor manufacturing policy, on June 1, the government reopened the applications for the semiconductor fabrication plants and asked the existing applicants including Vedanta-Foxconn JV to apply afresh and pursue mature nodes.

Foxconn, which has lately been expanding into chips to diversify its business, is known globally for assembling iPhones and other Apple products.

Earlier in March, the Tucheng-headquartered company had bought 300 acres at Devanahalli, near Bengaluru airport., where it is expected to invest up to $1 billion and make iPhones for Apple. Amidst speculations on Karnataka’s fate after the Taiwanese firm backed off from the semiconductor and display production plant in Gujarat.

Clearing the air, Gunjan Krishna, Karnataka Commerce and Industries Department Commissioner told DH that Foxconn had already taken custody of the land. “The land has not been transferred yet on paper. We are doing the paperwork but Foxconn has been given the land, they have levered the land and already begun working and testing.”