Vedanta signs up with Foxconn to manufacture semiconductors in India

In a significant development for the performance-linked incentive (PLI) scheme, Anil Agarwal-led Vedanta and Hon Hai Technology Group (also known as Foxconn) have formed a joint venture (JV) to manufacture semiconductors in India. This is the first JV in the electronics manufacturing space after the PLI policy, a joint statement issued by the companies said.    

In December 2021, the Centre had cleared a PLI scheme for semiconductor and display board production in the country targeting an investment of Rs 76,000 crore over the next five to six years. India Semiconductor Mission (ISM) was also announced recently with the aim to attract large investments for manufacturing facilities in the midst of a global chip crisis.

Discussions are being held with a few state governments to finalize the location of the plant. But company officials remained tight-lipped about the quantum of investment, location of project and estimated manufacturing capacity.

The Vedanta Group had in January shared its intent to invest $15 billion for making displays and semiconductor chips in India over the coming five years. It had acquired AvanStrate, a Japanese glass substrate manufacturer in December 2017 from the Carlyle Group.

The Hon Hai Technology Group is a multi-billion Taiwanese electronics contract manufacturer famed for making Apple’s iPhones and other popular products. In December, the company said it had raised stake in its India subsidiary by spending $350 million, terming the new investment as part of its long-term development in India.

Hon Hai, along with its subsidiaries including Foxconn, ranks first globally in the field of electronic manufacturing services (EMS), with a market share exceeding 40 per cent.  

According to the MoU signed between the two companies on Monday, Vedanta will hold majority in the JV while Foxconn will be the minority shareholder. Vedanta’s Agarwal will be the chairman of the joint venture company.

Bharat FIH Ltd, a subsidiary of FIH Mobiles and a Foxconn Technology Group company, had filed its draft papers for Rs 5,000-crore initial public offering in India recently.

Foxconn Technology Group also captured headlines in December when around 2,000 of its employees at an iPhone contract manufacturing unit in Sriperumbudur blocked Chennai-Bengaluru Highway for more than 12 hours, citing alleged food poisoning in one of its hostels leading to the hospitalization of 159 employees. Following this, the plant was put on probation by Apple Inc. The production restarted by the middle of January.

Foxconn had said it would revamp the local management team and operations in the wake of the Tamil Nadu protest.