Foxconn left its planned $19.5B India chip venture with Vedanta in July 2023

In July 2023 Foxconn pulled out of its joint venture with Indian conglomerate Vedanta, which had been announced in 2022 for a planned $19.5 billion semiconductor and display production project in India. The two sides “mutually agreed to part ways,” Foxconn said, citing recognition that the project was not moving fast enough, “challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project.”

The core problem was technology. European chipmaker STMicroelectronics was the project’s intended technology partner: Foxconn and Vedanta wanted to license its process, while India wanted STMicro to take an equity stake in the venture. STMicro would not, and the deadlocked talks became a major reason the venture failed, Reuters reported. Without STMicro, neither partner had chipmaking expertise — “both companies lacked the core competency of manufacturing a chip,” said Counterpoint Research’s Neil Shah, noting they were dependent on third-party technology and intellectual property.

The failure illustrates how hard it is for newcomers to enter chipmaking even for a large manufacturer. TSMC holds 59% of the foundry market on more than two decades of experience; BMI’s Gabriel Perez pointed to high capital intensity and access to coveted IP as the barriers, and Shah estimated it takes more than two decades of skill and scale to run a successful fab. Foxconn’s semiconductor push — a 2021 JV with Yageo, a chip plant bought from Macronix — was meant to make it a one-stop shop for electronics and automotive customers; the India venture was its biggest swing.

Foxconn withdrew from the planned $19.5 billion semiconductor and display project. This was the proposed investment amount, not a reported realized loss.

Neither partner had ever manufactured a chip; the entire technical plan hung on licensing STMicro’s process.

The deal asked STMicro to license technology without the equity stake India wanted — a three-way mismatch that stalled the project to death.

Chipmaking’s barriers — capital intensity, coveted IP, decades of process engineering — are precisely what an assembler does not have.

Foxconn’s diversification logic, becoming a one-stop shop for electronics and cars, conflated assembly scale with manufacturing know-how.

Contract-manufacturing skill does not transfer to the layer above it. Entering a business rivals learned over decades means your plan must name who owns the missing know-how.

Foxconn and Vedanta formally split in July 2023, each free to pursue other projects. Foxconn kept its broader semiconductor ambitions — the Yageo joint venture and the ex-Macronix plant — while analysts noted the collapse showed even giants cannot shortcut two decades of accumulated process knowledge.