Vedanta Ltd, owned by billionaire Anil Agarwal and located in Bangalore, announced it would take control from its holding company of Foxconn International Co, Taiwan’s joint venture established last year to produce semiconductors. Furthermore, they indicated their intent to acquire display glass ventures. This move comes only a week after India’s market regulator issued Vedanta with an $85,000 penalty for violating regulations by making disclosures which implied they were working together with Foxconn on this venture.
VFSL had signed memorandums of understanding with the Gujarat government in September 2022 to set up units for chip production and display fabrication, marking an important step in India’s efforts to become an international manufacturing hub – marking its inaugural major investment under an incentive scheme which promised subsidies worth $10 billion.
Foxconn announced its withdrawal on Monday, saying they are no longer willing to invest in the project and seek termination of contracts with VFSL. Their move had long been anticipated due to falling demand for iPhones as well as concerns surrounding their Dholera factory – however this decision came at no great surprise as Foxconn is also planning a second factory in China with plans of hiring 100,000 workers there.
On Tuesday, India’s government downplayed this development, saying it “changes nothing about our semiconductor goals”. Rajeev Chandrasekhar, India’s minister for electronics and information technology added that both companies could pursue their strategies for India without interference.
Vedanta announced it has already lined up partners in order to fulfill its commitments for semiconductor fab projects, though did not name them. Furthermore, it resubmitted its application for incentives under India’s new version of semiconductor programme which now allows applicants with production-grade technology or letters of intent from partners to apply as soon as they have secured one or have their commitment secured by an agreement in principle from one.
Vedanta’s revised application would permit them to begin manufacturing 40 nanometer (nm) chips in India from early 2022 if approved; this represents an upgrade over the current 28 nm chips produced at VFSL, giving Vedanta greater access to production-linked incentives.
Vedanta may benefit from its resubmission in chipmaking, though it will likely struggle against Foxconn’s massive facilities. Foxconn is the world’s largest contract manufacturer of electronic devices; its China plants produce around 60 million smartphones every month; this compares with 15 million from Vedanta operations which include AvanStrate Ltd – purchased as an acquisition in 2016. Vedanta boasts oil and gas reserves, copper, zinc, aluminium and iron ore deposits and infrastructure projects such as ports, power and steel projects with an estimated market value of roughly $8.5 billion.