- By Annabelle Liang
- business reporter
Apple supplier Foxconn has pulled out of a $19.5bn (£15.2bn) deal with Indian mining giant Vedanta to build a chip factory in the country This.
The move comes less than a year after the companies announced plans to set up facilities in the state of Gujarat, home of Prime Minister Narendra Modi.
Some analysts say it marks a setback for the nation’s tech industry goals.
However, a government minister said it would have no effect on the country’s chip-making ambitions.
Taiwan-based Foxconn told the BBC it would now “explore more diverse development opportunities”.
The company also said the decision was made in a “joint agreement” with Vedanta, which took full ownership of the joint venture, but gave no details on why it pulled out of the deal.
“We will continue to strongly support the government’s ‘Make in India’ ambition and establish a variety of local partnerships that meet the needs of stakeholders,” added Foxconn.
New Delhi-based Vedanta says it has “lined up other partners to form India’s first company” [chip] foundry”.
“The sudden withdrawal of Foxconn is a significant blow to India’s semiconductor ambitions,” Paul Triolo from global consulting firm Albright Stonebridge Group told the BBC.
“The obvious cause of the withdrawal was the lack of a technology partner and a clear path for the joint venture,” he added. “Neither party has substantial experience in developing and managing large-scale semiconductor manufacturing.”
However, Rajeev Chandrasekhar, Minister of Electronics and Information Technology of India, say on Twitter that Foxconn’s decision “does not affect the Indian semiconductor factory”.[rication] goal. Do not have.”
Mr Chandrasekhar added that Foxconn and Vedanta are “valuable investors” in the country and “will now pursue their strategy in India independently”.
The Indian government has been working on strategies to support the chip manufacturing industry.
Last year, it created a $10 billion fund to attract more investors into the sector, aiming to reduce its reliance on foreign chipmakers.
Prime Minister Modi’s flagship ‘Make in India’ plan, launched in 2014, aims to transform the country into a global manufacturing hub to compete with China.
In recent years, several other companies have announced plans to build semiconductor plants in India.
Last month, US memory chip giant Micron said it would invest up to $825 million to build a semiconductor assembly and testing facility in India.
Micron said construction of the new facility in Gujarat will begin this year. The project is expected to directly create up to 5,000 roles and another 15,000 jobs in the region.