Vedanta share price drops almost 3%; here's why Foxconn decided to exit the semiconductor JV
2 min read 11 Jul 2023, 10:54 AM ISTShares of Vedanta fell nearly 3 per cent after Foxconn pulled out of their $19.5 billion semiconductor joint venture. Vedanta says it has lined up other potential partners.
PremiumShares of Vedanta declined almost three per cent in morning trade on BSE on Tuesday, a day after Taiwan-based firm Foxconn said it had decided to pull out of a $19.5 billion semiconductor joint venture (JV) with Vedanta. The stock opened at ₹275 against the previous close of ₹282.25 and fell 2.6 per cent to ₹274.90 soon. The stock traded 1.26 per cent lower at ₹278.70 around 10:15 am.
Taiwan-based Hon Hai Technology Group, which is popularly known as Foxconn, and India's metals and mining conglomerate Vedanta announced a joint venture in 2022 to manufacture semiconductors in India's Gujarat. Vedanta was to hold the majority stake in the JV, according to the MOU signed between the two companies.
On July 10, 2023, Foxconn said in a statement that in order to explore more diverse development opportunities it had decided not to move forward on the joint venture with Vedanta.
"Foxconn is working to remove the Foxconn name from what now is a fully-owned entity of Vedanta," Foxconn said.
As per a Reuters report, quoting sources, "Concerns about incentive approval delays by India's government had contributed to Foxconn's decision to pull out of the venture. New Delhi had also raised several questions on the cost estimates provided to request incentives from the government."
Meanwhile, Minister for Railways, Communications, Electronics & Information Technology, Ashwini Vaishnaw wrote on Twitter that “Both the companies Foxconn and Vedanta are committed to India’s semiconductor mission and Make in India program."
Minister of State for Entrepreneurship, Skill Development, Electronics & Technology, Rajeev Chandrasekhar wrote on Twitter: “Withdrawal of Foxconn from its JV with Vedanta changes nothing about India's semiconductor goals. It allows both companies to independently pursue their strategies for Indian semiconductors and electronics."
After Foxconn's withdrawal from the JV, Vedanta said it has lined up other potential partners to set up India's first foundry.
"Vedanta reiterates that it is fully committed to its semiconductor fab project and we have lined up other partners to set up India’s first foundry. We will continue to grow our Semiconductor team, and we have the license for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM)," Vedanta said.
Earlier Vedanta said that it will acquire a 100 per cent stake in semiconductor and display units from sister concern Twin Star Technologies, the conglomerate. Twin Star Technologies is a wholly-owned subsidiary of Volcan Investments Limited which is the ultimate holding company of Vedanta Limited. The new structure will make Vedanta India's first company in Integrated Semiconductor and Display Fab Business.
Read more: Foxconn pulls out of $19.5 billion semiconductor JV but Vedanta says other partners already lined up
Vedanta shares have gained in sync with the benchmark Sensex in the last one year; both are up about 21 per cent in the last one year. The stock hit its 52-week high of ₹340.75 on January 20, 2023, and a 52-week low of ₹221.55 on July 11, 2022.
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