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Taiwan’s Foxconn said it had withdrawn from the $19.5 billion semiconductor joint venture with Indian multinational mining company Vedanta. While this unexpected announcement shocked many, raising doubts about India’s semiconductor goals, the government and Anil Agrawal’s company say otherwise. The decision came just a few days after US chip maker Micron Technologies signed an MoU with the Gujarat government. This is the same state where the Vedanta-Foxconn joint venture also wanted to establish its plant. But the announcement of the split seems to have raised many questions.

However, Vedanta said it is committed to its semiconductor fab project and has already lined up other partners to set up India’s first foundry.

“We will continue to grow our semiconductor team, and we have the licence for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM). We will shortly acquire a licence for production-grade 28 nm as well. Vedanta has redoubled its efforts to fulfil the Prime Minister’s vision for semiconductors and India remains pivotal in repositioning global semiconductor supply chains,” stated the New Delhi-based company.

Minister of State for Electronics and IT Rajeev Chandrasekhar also shared his views on this matter. Considering the doubts and questions raised since the announcement by the Taiwanese company, he stated: “This decision will not impact India’s goals for semiconductor fabrication”.

The minister pointed out that it was known that neither company had prior semiconductor experience or technology, so they were expected to source fab tech from a technology partner.

While their JV had originally submitted a proposal for a 28 nm fab, they could not source an appropriate technology partner for that proposal and then Vedanta, through VFSL, has recently submitted a 40 nm fab proposal backed by a technology licensing agreement from a global semiconductor major.

He further stated: “It’s not for the government to get into why or how two private companies choose to partner or choose not to, but in simple terms it means both companies can & will now pursue their strategies in India independently, and with appropriate technology partners in Semicon Electronics.”

Earlier, Union IT Minister Ashwini Vaishnaw stated that based on the industry’s suggestions about the chip requirement in September 2022 the government modified India’s semiconductor programme.

The Centre then asked applicants who submitted their applications in January this year to modify them as per the requirements and resubmit them. Then the 40 nm fab proposal was submitted, which is currently under evaluation.

Vaishnaw said that with such changes in the programme, the companies will have the option to focus on certain sectors and find new technology partners.

According to Chandrasekhar: “India’s strategy of catalysing Semiconductor Ecosystem has seen rapid progress in the 18 months since PM Narendra Modi approved India’s Semicon strategy and policy.”

Bhartendu Mishra, on-board Executive Council of India Electronic and Semiconductor Association​ (IESA), told News18 that in terms of possibilities, India is still an emerging market with a rapidly expanding demand across multiple sectors and the government’s efforts to establish fabs here will undoubtedly contribute to scaling up the country’s potential and making it a desirable destination.

“The investment made by Micron and other similar upcoming investments in ATMPs and OSATs serve as solid examples that shall elevate India to the level of countries like Malaysia, which have a significant presence in this space. As we continue to address the challenges in semiconductor supply chain efficiencies, investments in fabs will likely follow suit,” he said.

Regarding India’s chip growth, Mishra said that currently, the country should continue to prioritise boosting electronics manufacturing to meet local consumption demands and strive to become a global manufacturing hub for international demand. According to him, this progress will build a compelling case for investors to consider India as a practical investment option.

“We are a growing market and it will naturally attract various players and we should stay confident and focus on leveraging our strengths,” he noted.