Vedanta Shares in the Spotlight
Vedanta Shares are expected to draw attention following the announcement that Foxconn, the Taiwanese multinational electronics contract manufacturer, is pulling out of a $19.5 billion joint venture with Vedanta Ltd. The joint venture aimed to establish semiconductor manufacturing in India. While Foxconn plans to remove its name from the fully-owned entity now belonging to Vedanta, the Indian company remains committed to its semiconductor fab project and has lined up alternative partners.
Foxconn has announced its decision not to proceed with the joint venture with Vedanta, which was intended to create semiconductor production facilities in India. In a statement, Foxconn revealed its plans to disassociate itself from the fully-owned entity of Vedanta.
Despite Foxconn’s withdrawal, Vedanta reaffirms its full commitment to the semiconductor fab project. A spokesperson for Vedanta stated that the company has already secured other partners to help establish India’s first foundry, reflecting their dedication to the project and the vision of Prime Minister Narendra Modi.
Recently, Vedanta disclosed that it has acquired full ownership of both Vedanta Displays and Vedanta Foxconn Semiconductors Private Limited. These entities were wholly-owned subsidiaries of Twin Star Technologies Limited, which itself is a subsidiary of Volcan Investments Limited, the ultimate holding company of Vedanta Limited.
Revised Semiconductor Program
The Vedanta Foxconn joint venture has submitted a new application for approval of a production facility for electronic chips under the modified semiconductor program. The Indian government has increased fiscal incentives to 50 percent of the project cost for setting up semiconductor fabs and display fabs in the country.
The joint venture between Vedanta and Foxconn aimed to manufacture chips starting with a size of 40 nanometers (nm) and then transition to 28nm, with a projected capacity of 40,000 wafers per month. The investment plan for display and semiconductor fabrication units involved a 63:37 ratio, with a total investment of Rs1.54 lakh crore.
Search for a Third Equity Partner
Morgan Stanley’s note on July 3 revealed that the Vedanta joint venture was actively seeking a third equity partner. The consortium was reportedly exploring the possibility of partnering with STMicroelectronics as a technology partner. Disagreements over technology transfer, the length of the joint venture, and investment contributions, however, are said to have caused the discussions to halt.
Vedanta’s Future Outlook
Despite the setback with Foxconn, Vedanta remains resolute in fulfilling the Prime Minister’s vision for semiconductors. The company emphasizes the significance of India’s role in reshaping global semiconductor supply chains. Year-to-date, Vedanta shares have experienced an 11 percent decline, compared to a 1.58 percent drop in the BSE Metal index during the same period.