In a setback to Prime Minister Narendra Modi’s intentions for Indian chip manufacturing, Taiwan’s Foxconn announced on Monday that it had left a $19.5 billion Joint Venture in the semiconductor industry with Indian metals-to-oil behemoth Vedanta.

Details on Foxconn abandons the $19.5 billion Vedanta chip project, hurting India

The largest manufacturer of contract electronics in the world, Foxconn, and Vedanta agreed to establish semiconductor and display manufacturing facilities in Gujarat last year.

The electronics manufacturer stated in a statement that “Foxconn has determined it will not move forward on the joint venture with Vedanta,” but did not provide any other information.

Vedanta and Foxconn had been collaborating on “a great semiconductor idea” for more than a year, but they had mutually agreed to discontinue the joint venture, and Foxconn will have its name removed from what is now a totally owned Vedanta firm.

In order to usher in a “new era” in electronics manufacturing, PM Modi has made chipmaking a top goal for India’s economic strategy. Foxconn’s decision is a setback to his hopes of persuading international firms to start making chips domestically.

When contacted for comment, Vedanta did not respond right away.

Foxconn is best known for assembling iPhones and other goods made by Apple (AAPL.O), but in recent years it has been diversifying its business by introducing chip manufacturing.

According to prior reports from Reuters, PM Modi’s plan was in jeopardy since the Vedanta-Foxconn project was moving slowly due to a stalemate in their negotiations to include the European chipmaker STMicroelectronics (STMPA.PA) as a partner.

Vedanta-STMicro had agreed to license technology to Foxconn, but the Indian government made it plain that it wanted more “skin in the game” for the European company, namely a stake in the joint venture.

A source had previously stated that STMicro was not keen on that and that the conversations were still ongoing.

Three applications to establish facilities under a $10 billion incentive program were received last year from India, which anticipates that its semiconductor market will be worth $63 billion by 2026.

These came from IGSS Ventures in Singapore, the Vedanta-Foxconn joint venture, and the international consortium ISMC, which counts Tower Semiconductor (TSEM.TA) as a technology partner.

Due to Tower’s acquisition by Intel, the $3 billion ISMC project has also been put on hold, and IGSS’s $3 billion plan was also shelved because the company intended to reapply.

The post Foxconn abandons the $19.5 billion Vedanta chip project, hurting India appeared first on SomMarketer.