Foxconn, the world’s largest contract electronics manufacturer and a key supplier to Apple, has backed out of a $19.5bn deal with Vedanta Resources to build a semiconductor plant in India.
The companies had announced the joint venture in August 2022, saying it would create 100,000 jobs and boost India’s domestic chip production.
But less than a year later, Foxconn said it had “mutually agreed” with Vedanta to terminate the partnership and explore other opportunities.
The move is seen as a blow to India’s ambitions to become a global hub for chip making and reduce its reliance on imports.
India’s deputy IT minister Rajeev Chandrasekhar told reporters that the government was “not perturbed” by Foxconn’s decision and that it had other plans to attract chip makers to the country.
He said India had received expressions of interest from 22 companies, including Intel, Samsung and Qualcomm, to set up semiconductor fabrication units.
Vedanta, a London-listed mining conglomerate with interests in oil, gas, metals and power, said it remained committed to the chip making project and had secured other partners.
It did not name the partners but said they included “global leaders in the semiconductor industry”.
Vedanta said the project would be located in Gujarat, Prime Minister Narendra Modi’s home state, and would have an annual capacity of 20 million wafers.
Wafers are thin slices of silicon that are used to make chips for various devices such as smartphones, computers and cars.
India currently imports about 95% of its semiconductor needs, spending more than $50bn a year, according to industry estimates.
The country has been trying to boost its domestic chip production for years, but has faced challenges such as high costs, lack of infrastructure and skilled manpower, and policy uncertainties.