Concerns Over Vedanta's 'Financial Situation' Led To Foxconn Exiting Chipmaking JV: Report

The Indian government and Foxconn reportedly had concerns over Vedanta's financial situation, which led to the Taiwanese manufacturing giant to pull out of a chipmaking joint venture with the Vedanta.

Vedanta Resources, the London-based parent company of Indian conglomerate Vedanta Ltd, is grappling with a mounting debt burden.

However, Vedanta was quoted by Reuters as saying that its Indian unit, Vedanta Ltd, is in "a comfortable financial position" and there was "no basis" to such speculation.

This year, the company has faced downgrades from several ratings agencies due to concerns about the potential risks of a debt default, reports Reuters.

Vedanta Chairman Anil Agarwal has stated that there have been no defaults on debts from the group.

Earlier on Monday (10 July), Foxconn announced that it was withdrawing from a chipmaking joint venture with Vedanta.

Last year, Foxconn and Vedanta signed an agreement to invest $19.5 billion in setting up semiconductor and display production plants in Gujarat, as part of India's plans to become a major player in the electronics industry.

In a statement, Foxconn expressed its intention to remove its name from the fully-owned entity of Vedanta, stating that any efforts to retain the original name would cause confusion for future stakeholders.

In another statement on Tuesday (11 July), Foxconn said that it plans to submit another application under the modified Production-Linked Incentive (PLI) scheme of India for semiconductors.

“Foxconn is working toward submitting an application related to the ‘Modified Programme for Semiconductors and Display Fab Ecosystem,’” the firm said in a statement on Tuesday.

“We understand there is a lot of interest in Foxconn’s plans and India’s information ecosystem is porous,” the company said, adding that it maintained open lines of communication with the government leading up to the breakdown of the deal. “However, due to the competitive and sensitive issues involved in negotiating large scale investments, Foxconn is unable to disclose more information at this time.”

Last week, Vedanta Group acquired full ownership of the joint venture with Foxconn, which was known as Vedanta Foxconn Semiconductors Private Limited and operated as a wholly-owned subsidiary of Twin Star Technologies Limited, an entity of the Vedanta group.