Foxconn on Monday said it has decided to pull out of a semiconductor joint venture with Indian conglomerate Vedanta, according to a statement.
Foxconn said it is "working to remove the Foxconn name from what now is a fully-owned entity of Vedanta".
"Foxconn has no connection to the entity and efforts to keep its original name will cause confusion for future stakeholders," Hon Hai Technology group (Foxconn) said.
The deal that was hailed by the centre and would have been a landmark fell apart in less than a year. The partnership would have helped build a $19.5 billion manufacturing plant in Gujarat.
Foxconn in its statement did not give out a reason but it is understood that one of the major reasons for the pull back was the ability of Vedanta. Vedanta is reeling under a heavy debt load and there has been a delay to pay for acquiring the necessary technology for chipmaking.
The company pulled out of the semiconductor joint venture after the Indian government asked Vedanta some questions when it applied for an incentive scheme for chip production, reported First Post. The government had also asked many questions on the cost estimates that were submitted to the government for the incentives from the government.
Another problem the joint venture faced was with the involvement of European chipmaker STMicroelectronics (STMPA.PA) as a tech partner. While they were successful in getting the European company on board the government said it wanted STMicro to have more involvement like owning the stake in the partnership.
But as STMicro was not interested in owning stakes the talks went back on a halt.
Impact on India
However both companies are keen on helping India's semiconductor and make in India mission.
Foxconn said it is confident about the direction of India's semiconductor development and will also support the government's make in India ambitions.
Even Union Minister Ashwinin Vaishnav through a tweet said, "This decision of Foxconn to withdraw from its JV with Vednata has no impact on India's Semiconductor Fab goals."
He further added, "Both Foxconn and Vedanta have significant investments in India and are valued investors who are creating jobs and growth."
He further went on to add that Vedanta through VFSL recently submitted a 40nm fab proposal backed by Tech licensing agreement from a Global Semicon major that is being evaluated by Semicon India Tech Advisory group. He also said that both companies will independently pursue their strategies in India and with appropriate technology partners in Semicon n Electronics.
He also said, "India is just getting started."
In support of its statement on offering support to India Foxconn is planning to apply separately for setting up a semiconductor manufacturing unit in the country, the electronic giant Foxconn said in a statement.
The company also added that it is reviewing companies for a possible partnership for the project.
The company in the statement said, "Foxconn is working toward submitting an application related to the Modified Programme for Semiconductors and Display Fab Ecosystem. We have been actively reviewing the landscape for optimal partners."