Foxconn withdrew from “hitting India’s chip ambitions”, senior Indian officials urgently voiced: India has just started

“Foxconn withdrew from its plan to establish a joint venture with an Indian company, a blow to Indian Prime Minister Modi’s chip manufacturing ambitions” – Reuters said on the 11th. The day before, Taiwanese technology company Foxconn announced it was withdrawing from a $19.5 billion semiconductor joint venture with Indian mining group Vedanta. According to the original plan, this should have been India’s first semiconductor foundry. The news sparked a lot of discussion from the outside world, and senior officials of the Indian government urgently spoke out to appease them, saying that this “does not affect the semiconductor goals of the Indian government at all.” However, on the 11th, the British Broadcasting Corporation (BBC) quoted Triolo, an expert from Albright Stonebridge Group, a global consulting firm, as saying: “Foxconn’s unexpected withdrawal is a considerable blow to India’s semiconductor ambitions.” Earlier, Reuters recently published an article saying that India’s semiconductor dream is facing harsh reality, and suggested that “India’s chip dream can be lowered.”

“Amazingly, it survived for more than 15 months”

According to Reuters, Foxconn’s parent company Hon Hai Group issued a statement on the 10th saying that in order to explore “more diversified development opportunities”, according to the agreement between the two parties, Foxconn decided not to advance the joint venture project with Vedanta. The Indian company is fully owned. Vedanta Group said on the same day that the company is fully committed to its semiconductor project and will work with other partners to establish India’s first foundry.

“The failure of the joint venture is not surprising. What is surprising is that it has survived for more than 15 months.” Hong Kong’s “South China Morning Post” quoted semiconductor analyst Manpazi as saying on the 11th. According to reports, the two companies announced their cooperation in February last year, planning to build a semiconductor manufacturing plant in Gujarat, the hometown of Indian Prime Minister Narendra Modi. Foxconn said at the time that it would invest $118.7 million for a 40 percent stake in the joint venture. This also makes Foxconn a major foreign technology manufacturer responding to the Indian government’s “chip manufacturing localization” strategy. The Indian government has approved the establishment of a $10 billion incentive plan by the end of 2021 to attract global semiconductor and display manufacturers to build factories in India.

Neither company gave details of the reasons for the termination. Hon Hai Group issued a follow-up statement on the 11th, denying “lost confidence in India’s semiconductor ambitions”, saying that Foxconn withdrew from the joint venture project because “both parties recognize that the project is not progressing fast enough, there are challenging gaps that we cannot overcome, and there are challenges related to the project.” irrelevant external issues”.

Reuters quoted people familiar with the matter as saying on the 11th that Foxconn’s decision to withdraw from the joint venture was due to concerns about the delay in approving incentives by the Indian government and the debt problems of the British parent company of the Indian company. Neil Shah, vice president of market research firm Counterpoint, said, “The failure of this deal is undoubtedly a setback for the ‘Make in India’ process.”

The US technology website The Verge stated that Foxconn’s deal with Vedanta is just its latest failure. “The state of Wisconsin in the United States has experienced a painful lesson. It provided Foxconn with US$4 billion in incentives, but it was not enough for the company to build a factory.” In June 2018, Foxconn’s Wisconsin factory held a groundbreaking ceremony. Trump participated, but this “great achievement” regarded by the US government as “reviving Made in America” soon fell into crisis.

Indian official: Gambling with India is a bad idea

CNN stated on the 11th that the Foxconn project was hailed as a milestone for India to attract more manufacturing investment. The latest news was seen as a blow to the Indian government’s plans for a tech manufacturing powerhouse, although officials have been trying to refute that.

The “Wall Street Journal” stated on the 11th that Chandrasekhar, India’s Deputy Minister of Electronics and Information Technology, is the main supporter of India’s entry into the chip field. He issued an eight-point statement on Twitter on the 10th, saying that the dissolution of the joint venture “” It will not affect India’s semiconductor manufacturing goals at all”, “As we all know, neither of these two companies has experience in the semiconductor field and need to purchase technology from partners.” “The government has no right to inquire into why or how two private companies choose to cooperate or not, but in simple terms, it means that the two companies can and will now pursue their strategies in India independently and cooperate with the semiconductor industry,” the official said. cooperation with technology partners”. He also warned against comments that Foxconn’s withdrawal was “a blow to India’s semiconductor ambitions,” saying: “It’s a bad idea to bet against Prime Minister Modi’s India,” and “India is just getting started…”

The Congress Party used this to criticize the Modi government. Ramesh, the former environment minister of India and member of the Congress Party, tweeted on the 10th that the fate of the Foxconn project “is the fate of the many memorandums of understanding signed at the ‘Vigorous Gujarat Summit’ year after year, and will also be the fate of other Indian companies. Similar to the fate of the summit”. Chandrasekhar launched a counterattack against this, and also involved China, saying that “China has continued to develop in the past 30 years, but those in the Congress Party have not taken any action in the semiconductor field.”

According to Reuters, at present, most of the world’s cutting-edge semiconductor products are produced in mainland China and Taiwan, and India has no experience in chip manufacturing. The main hurdle for the Foxconn joint venture project from the start was that both companies were new to the semiconductor field. European chipmaker STMicroelectronics had been invited as a technology partner in the joint venture, but talks stalled, the report said. The Indian government wants “more involvement” from the European company, such as taking a stake in a joint venture, but STMicroelectronics is not keen on this.

British media advises India to “lower target”

“India’s chip dream can be lowered,” Reuters reported on July 5 under the title that after failing to attract cutting-edge chipmakers such as TSMC to set up operations in the country, the Indian government now has to settle for insufficient production. Too advanced chips. Modi wants to “start a new era of electronics manufacturing” by turning India into a chip-making powerhouse. So far, the government has promised $10 billion in subsidies, with little success. Under the subsidy mechanism, India received three applications to set up factories last year, but all stalled.

The objective conditions for the development of semiconductors in India are not mature, including the lack of stable electricity, skilled technicians and supporting facilities. However, Hon Hai has many other investments in India, and Foxconn’s approach does not rule out that it is bargaining with India to put pressure on the Indian government on other projects. For the Indian government, Hon Hai’s sudden withdrawal from the joint venture will have a bad demonstration effect. When other companies invest in India, they must refer to the case of Hon Hai, and they may be discouraged, making their investment in India very cautious.

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