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| Focus Con Technology cancels multibillion-dollar investment deal in India: Is this a blow to Modi's 'big dream'? |
Taiwanese company Focuscone Technology has canceled a $19.5 billion investment deal with Indian company Vedanta in the state of Gujarat to manufacture semiconductors in India.
The cancellation of the agreement could deal a blow to Indian Prime Minister Narendra Modi's plans to make India a semiconductor manufacturing hub, but the Indian government has said that the withdrawal of the agreement by the Taiwanese company with the Indian company will affect India's semiconductor industry. Will not deviate from production goals.
India's Minister of State for Electronics and Information Technology Rajeev Chandrasekaran has said that the decision will allow the two companies to work independently on their strategies.
Rajeev Chandrasekaran said in a tweet that India under the leadership of Prime Minister Narendra Modi has made significant progress in electronics production in the last 9 years and semiconductor production in the last 18 months.
Focuscone's $19.5 billion deal with Vedanta was considered the world's largest contract for semiconductor production.
"Focuscon has decided not to proceed with its joint venture with Vedanta in India," FocusCon said in a statement on Monday.
Focuscone said it had worked with Vedanta "to bring the semiconductor idea to life but has decided not to collaborate."
FocusCon has said it will remove its name entirely from the unit now owned by Vedanta.
Vedanta, however, said in a statement that it is fully committed to its semiconductor production targets and is in talks with other partners to set up India's first semiconductor production unit.
Vedanta said in a statement that it has redoubled its efforts to achieve Prime Minister Modi's goals.
It should be noted that Prime Minister Modi has prioritized semiconductor manufacturing in India's economic strategy to usher in a 'new era' of electronics manufacturing.
The Indian government had made special efforts to attract foreign investment in this sector.
This is the reason why this decision of Focuscon is being termed as a big blow to India's ambitions.
Reacting to this news, Congress leader Jairam Ramesh said in a tweet, "Remember when this project was announced?" The Chief Minister of Gujarat even claimed that one lakh jobs will be created through this project.
Responding to Congress' allegations, Union Minister of State Rajeev Chandrasekaran said that Congress did nothing for electronics and semiconductors in India for three decades while China continued to advance. India's development will not be slowed down by Congress's noise on this.
Rajeev Chandrasekaran also said that it is not the government's job to see how and why two private companies come together or separate.¬
Focuscone is one of the world's largest electronics manufacturing companies and is best known for manufacturing Apple's iPhones. In recent years, this Taiwanese company has also been making efforts to advance in the field of semiconductor manufacturing.
Worldwide production of semiconductor chips is limited to certain countries such as Taiwan. India has belatedly tried to enter this field.
In September last year, Vedanta and FocusCon announced an agreement to set up a semiconductor manufacturing plant in Prime Minister Narendra Modi's home state of Gujarat.
At the time of the deal, Prime Minister Modi had hailed it as a major step towards semiconductor manufacturing in India.
The Government of India had also launched the PLI i.e. Production Linked Initiative scheme for this. This incentive scheme of the central government is worth about ten billion dollars
The Reuters news agency has quoted sources as saying that the Indian government's delay in giving PLI could also be the reason for the breakdown of the agreement.
The Indian government has set a target of raising semiconductor production to $63 billion by 2026.
According to Reuters, last year three companies applied to set up plants under the Indian government's scheme.
Indian PM Modi
, image source GETTY IMAGES
The applications were from Focuscon-Vedanta joint venture, Singapore-based IGSUS Ventures, and global industrial group ICMC.
ICMC's $3 billion project is currently pending after Intel acquired ICMC's technology subsidiary Tower Semiconductor.
The IGSS project has also been delayed as the company wants to resubmit its application.
India has once again invited applications from companies to set up semiconductor plants.
Experts believe that the biggest challenge of this semiconductor production plant project was that the two companies involved had no special experience in chip production.
Speaking to the American newspaper Wall Street Journal, Neel Shah, vice president of Counterpoint Research, said that both companies are new in this field. They have not developed the chip before. I've never seen any excitement about it in the industry."
Neil Shah also said that the project's failure at an early stage could be indirectly beneficial as it would pave the way for other efforts.
Neil Shah said that India should continue its incentive program focus should be on experienced semiconductor producers like Akron.
Last month, during Prime Minister Modi's visit to the US, the leading US chip maker Micron decided to invest in India.
Micron had said it would invest $825 million in India. Although this investment will not be in production in the area of chip testing and packaging. With financial support from the Central Government of India and the State Government of Gujarat, this investment will increase to $2.75 billion.