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Taiwanese electronics manufacturing giant Foxconn is actively considering its options to set up a semiconductor production site in India after a failed joint-venture attempt.

Foxconn this week called off a $19.5bn semiconductor JV deal with Indian conglomerate Vedanta Group, dealing a heavy blow to New Delhi’s manufacturing push.

In a bid to publicly downplay any negative effects on its investment commitments, Foxconn said it was “stitching together a new plan” to apply for incentives under India’s modified semiconductor and display fabrication programme.

The updated programme offers financial incentives of up to 50% of project investment for companies or partnership groups seeking to open semiconductor fabrication lines in India of any node, including mature nodes. Similar incentives are available for projects involving display fabs of specified technologies.

According to industry sources, Foxconn has already reached provisional agreements with some technology partners to build fab lines in India.

“We welcome a diverse set of stakeholders, both inside India and abroad, who also want to see India get to the next level and can complement Foxconn’s world-class supply chain management and manufacturing efficiency,” said the major Apple supplier.

Following arriving in India in 2006, Foxconn has iPhone and other smartphone manufacturing facilities in the country’s southern states of Tamil Nadu and Andhra Pradesh. And it recently inked a deal to invest in Telangana state, with some 200 acres allotted by the local authority.

Foxconn also said it had chosen to scrap the JV – announced in February last year – because of its “limping progress” and other external reasons.

According to sources, nagging differences with the government, in regard to the role of European chipmaker STMicroelectronics as a technology partner, put the project in limbo, leading to its dissolution.

New Delhi has been bullish about its semiconductor market potential, estimating it at some $63bn by 2026.  But there is a general view that the collapse of the much-hyped Foxconn-Vedanta project has derailed these ambitious chip-making goals, designed to make India a “global electronics powerhouse”. To that end, an industry-friendly pilot programme to boost its electronics repair services outsourcing (ERSO) capabilities was also recently unveiled.

And the JV setback also has the potential to impact investment decisions by other international companies searching for alternatives to doing business with China. For now, much of India’s semiconductor push would hinge on a deal it recently signed with US memory chip producer Micron Technology.

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