Electronic System Design and Manufacturing Sector – M-SIPS, National Policy on Electronics, etc.

Foxconn withdraws Chip Manufacturing Deal   


From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: Semiconductor industry in India

foxcon chip

Central Idea

  • Taiwan-based Hon Hai Technology Group, commonly known as Foxconn, has announced its withdrawal from a $19.5 billion semiconductor joint venture with the Vedanta Group.
  • The decision comes as Foxconn aims to explore alternative development opportunities.

Background and JV Details

  • The joint venture aimed to establish a semiconductor fabrication plant in Gujarat, India.
  • The plant was intended to produce 28 nanometer semiconductors.
  • The partnership was expected to boost India’s semiconductor manufacturing capabilities.

Foxconn’s Decision to Withdraw

  • Fulfilling Technology Transfer and Investment Requirements: Reports suggested that the firms were unable to meet the government’s demands for increased technology transfer and investment from European firm STMicroelectronics.
  • Financial Constraints: Vedanta’s heavy debt burden and its ability to finance the acquisition of chipmaking technology are believed to have played a significant role in Foxconn’s decision to pull out of the joint venture.
  • Differences and Lack of Progress: Senior government officials confirm that the joint venture encountered difficulties and differences, leading to the realization several months ago that Foxconn would withdraw.
  • Diverse Development Opportunities: Foxconn cited the need to explore a wider range of development opportunities as the reason for its withdrawal from the joint venture.

Vedanta’s response

  • Commitment from Vedanta: Vedanta stated that it will continue to pursue other partnerships and highlighted its possession of a license for production-grade technology for 40nm chips from a prominent Integrated Device Manufacturer (IDM).
  • Importance of India in Semiconductor Supply Chains: Vedanta reiterated the significance of India in global semiconductor supply chain repositioning efforts.
  • Independence and New Partners: Vedanta intends to remove the Foxconn name from the fully-owned entity and pursue partnerships with other companies to establish India’s first foundry.
  • Production Licenses: Vedanta highlights its possession of a license for production-grade technology for 40 nm chips and the forthcoming acquisition of a license for production-grade 28 nm chips.
  • Government Evaluation: The government will evaluate Vedanta’s proposal, but the absence of Foxconn may affect the progress of the application.

Government’s position

  • Commitment to India’s Semiconductor Mission: Electronics and Information Technology Minister assured that both Foxconn and Vedanta remain dedicated to India’s semiconductor mission and the Make in India program.
  • Continuation of Semiconductor Growth: The government aims to continue developing India’s semiconductor industry and attract further investments.

Uncertainty Surrounding Other Proposals

  • ISMC Proposal: ISMC, backed by Next Orbit and Tower Semiconductor, has requested that its proposal not be considered due to the pending merger between Intel and Tower Semiconductor. The proposal for a $3 billion semiconductor fab in Karnataka is expected to remain on hold until the merger is finalized.
  • IGSS Venture Proposal: The proposal by Singapore-based IGSS Venture did not meet the standards set by the government’s advisory committee and is currently on hold.

Importance of Chipmaking for India

  • Strategic Sector: India has identified electronics manufacturing, including chipmaking, as a critical sector for domestic production and export growth.
  • Domestic Supply Chain: Chip manufacturing plays a crucial role in developing a domestic electronics supply chain, reducing reliance on imports, particularly from China.
  • Opportunity for India: As companies seek to diversify their manufacturing bases away from China, India has the potential to emerge as a reliable destination for semiconductor manufacturing.
  • Global Context: The US has passed the CHIPS Act, providing significant subsidies for chip manufacturing domestically, while imposing restrictions and sanctions on China’s semiconductor industry.


  • Foxconn’s withdrawal and uncertainties surrounding other proposals highlight challenges in India’s semiconductor manufacturing plans.
  • Financial constraints faced by Vedanta and the need for technology acquisition pose hurdles to realizing India’s chipmaking ambitions.
  • Nonetheless, India’s focus on chip manufacturing remains a strategic priority to develop a domestic electronics supply chain and reduce dependence on imports.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Notify of
Inline Feedbacks
View all comments


Join us across Social Media platforms.

💥Mentorship New Batch Launch
💥Mentorship New Batch Launch