Shares of Vedanta witnessed a decline of nearly three percent following the announcement that Taiwan-based company Foxconn has decided to withdraw from a $19.5 billion semiconductor joint venture with Vedanta. The stock opened at ₹275 and fell to ₹274.90, trading 1.26 percent lower at ₹278.70.

The joint venture between Foxconn, also known as Hon Hai Technology Group, and Vedanta was aimed at manufacturing semiconductors in Gujarat, India. Vedanta was expected to hold the majority stake in the venture as per the memorandum of understanding (MOU) signed between the two companies.

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In September 2022, the Vedanta and Foxconn’s semiconductor manufacturing plant in Gujarat received praise from the Centre, considering it a significant milestone. The signing of a Memorandum of Understanding (MoU) between the two companies and the state government in Gandhinagar was attended by Chief Minister Bhupendra Patel and IT Minister Ashwini Vaishnaw.

However, on July 10, 2023, Foxconn released a statement explaining its decision to withdraw from the joint venture with Vedanta. The company stated that it aims to explore diverse development opportunities and is working to remove its name from the entity, which now belongs entirely to Vedanta.

Concerns about delays in incentive approvals by the Indian government and questions raised by New Delhi regarding cost estimates for incentives were cited as factors contributing to Foxconn’s withdrawal, according to Reuters sources.

Indian ministers Ashwini Vaishnaw and Rajeev Chandrasekhar took to Twitter to express that the withdrawal of Foxconn does not impact India’s semiconductor goals and that both Foxconn and Vedanta remain committed to India’s semiconductor mission and the Make in India program.

In response to Foxconn’s withdrawal, Vedanta affirmed its dedication to the semiconductor fab project and stated that it has identified other potential partners to establish India’s first foundry. Vedanta also highlighted that it possesses the license for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM).

Previously, Vedanta announced its acquisition of a 100 percent stake in the semiconductor and display units from Twin Star Technologies, a subsidiary of Volcan Investments Limited. This move positions Vedanta as India’s first company in the Integrated Semiconductor and Display Fab Business.

While Foxconn’s decision to withdraw from the joint venture may have impacted Vedanta’s plans, the company remains committed to advancing India’s semiconductor industry and is actively seeking alternative partnerships to realize its goals.