India Enters the Chip Manufacturing Race with Foxconn and Vedanta

India has taken a big step towards playing its role in the semiconductor manufacturing industry, with news that one of the world’s largest contract electronics manufacturer, Foxconn, will be working with steel company Vedanta in the South Asian country.  

In a joint press release, Foxconn noted it had signed a memorandum of understanding (MOU) with oil-to-metals group Vedanta to make semiconductors, calling it “a significant boost to domestic manufacturing of electronics in India.”  

According to the MOU signed between both companies, Vedanta will hold most of the equity in the joint venture, while Foxconn will be the minority shareholder. In a released statement, Foxconn revealed that Vedanta Chairman Anil Agarwal would be the Chairman of the joint venture company.  

In the meantime, discussions are in progress with a few State Governments to finalize the plant’s location.  

“This first-of-its-kind joint venture between the two companies will support Indian Prime Minister Narendra Modi’s vision to create an ecosystem for semiconductor manufacturing in India,” the statement said.  

In recent years, the Taiwanese company counted semiconductors among its core businesses. Last year, it partnered with Yageo Corp to manufacture semiconductor chips, following a global chip shortage that has rattled producers of goods from cars to electronics.  

Also, in recent years, the company announced plans to become a significant player in the global electric vehicles (EV) market, saying it was in talks with “related foundries” on possible collaboration to make chips for EVs.  

The collaboration between the two companies is adjusted to the Indian government’s recent policy announcement for electronics manufacturing and the production linked incentive (PLI) scheme for incentivizing organizations to develop this sector. This development will be considered the first joint venture in the electronics manufacturing space after the announcement of the policy. 

Some sources informed local reports that Foxconn would invest $118.7 million to set up a joint venture company with Vedanta to become the majority shareholder of the new venture. Foxconn would hold 40 percent of the venture’s shares.