India's chip factory plan has been in the spotlight, however, its implementation has been slow. Despite repeated attempts by the Indian government to attract international chipmakers, only a few companies have expressed interest in setting up chip factories in India, while international giants such as Intel and Samsung TSMC have not shown obvious interest. This situation presents opportunities for a number of companies, including Foxconn, a subsidiary of Hon Hai Group.
Foxconn had no previous experience in chip manufacturing, so they chose a joint venture with India's Vedanta and planned to invest $19.5 billion in India to build a semiconductor supply chain. However, their subsidy application was rejected because the Indian government expressed doubts about its chip-making capabilities.
The problem seems to be mainly with Vedanta because they wanted to license ST's technology, but they were snubbed and did not have the opportunity to cooperate deeply. Initially, the situation seemed to dampen Foxconn's motivation. However, the Indian government has recently re-applied for subsidies to Foxconn and Vedanta again, which seems to indicate that they are willing to open the door to subsidies for chip manufacturing.
However, at this critical moment, the Indian top suddenly expressed concern about the financial stability of Vedanta and suggested that Foxconn re-find a partner. The proposal may seem good for Foxconn, but it also carries the possibility that the Indian government may try to take the $19.5 billion project into its own hands.
First, Foxconn has tried to engage with other large Indian companies, but does not seem to have made progress. This has left them to only enter into a joint venture with Vedanta, but Vedanta has shown that they have the ability to repay debt, which means that Foxconn is unlikely to find other partners to exclude Vedanta from the joint venture. Therefore, the Indian government has advised Foxconn to find new partners, which seems to benefit both sides.
However, there is also the possibility that the Indian government may try to take Foxconn's investment projects for itself. Micron has announced that it will invest up to $825 million in India, bringing the total investment to $2.75 billion, 70% of which will come from the Indian government. If Foxconn is unable to find the right partner and is unwilling to take on the $19.5 billion investment alone, working with the Indian government will be an attractive option. This could lead to Foxconn's money, as well as the entire project, ending up in India.
The Indian government's statement seems to have multiple meanings. They may be trying to alert Foxconn that Vedanta's finances are not stable enough, which could lead to the joint venture being in trouble. However, it could also be a signal that the Indian government is trying to take back Foxconn's investment projects. Against this backdrop, how Foxconn will respond is unclear. After all, the Indian government has been emphasizing the idea of "making money in the Indian market", which has worried multinational companies. Regardless of the final outcome, India's chip manufacturing program remains challenging, and there may be more to come to this story.