New Delhi:- Foxconn said it was completing an ambitious project to help build India's first chip factory. The world's largest contract electronics maker said Monday it would "no longer pursue" a $19.4 billion joint venture with India's metals and energy group Vedanta (VEDL), Asia's third-largest economy.

The news was seen as a blow to the Indian government's plans to turn India into a tech-producing powerhouse, but officials are trying to refute that view.

Taiwanese technology giant Foxconn, known as one of Apple's top suppliers (AAPL), said in a statement to CNN that the decision was based on "mutual agreement" and that the company was "exploring more diverse development opportunities. to do,” he said. The joint venture will now be wholly owned by Vedanta.

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In a follow-up statement on Tuesday, Foxconn reiterated its commitment to investing in chip manufacturing in India and said it would apply for a government program to subsidize the cost of setting up a semiconductor and electronic display manufacturing facility in India. rice field. “Embracing new regions is a challenge, but Foxconn is fully committed to investing in India,” the company said, referring to its manufacturing facility (a parlance for semiconductor factories). 

"Both sides recognized that the project was not moving fast enough, that there were difficult gaps that could not be filled smoothly, and that there were external issues unrelated to the project," it said.

Since announcing the deal in February 2022, Foxconn said it has been working with Vedanta on plans to build a semiconductor fab in the country that will support a broader ecosystem of manufacturers.

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The amount invested in the plant was not disclosed, but Indian Prime Minister Narendra Modi tweeted in September that the total investment was 1.54 trillion rupees, equivalent to US$19.4 billion at the time. Foxconn CEO Young Liu has been courting Indian partners in recent months after visiting India in February to find new cooperation partners.

The company already has factories in India's Andhra Pradesh and Tamil Nadu states, and many global tech companies are exploring opportunities in India, especially as multinationals look to diversify their supply chains beyond China. One of the companies.

India's Electronics and Information Technology Minister Ashwini Vaishnau told news agency News 18 of India and CNN affiliate News 18 on Monday that both Vedanta and Foxconn are "committed to India's semiconductor mission." Foxconn said last year that it was actively seeking a site for the plant and had discussions with "some state governments." 

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The country's Minister of State for Electronics and IT, Rajeev Chandrasekhar, also tweeted, saying the news "does not change India's semiconductor manufacturing goals", adding that the decision "will continue to ensure that both companies have their own It will allow us to pursue our strategy,” he added.

The project has been hailed as a milestone in India's campaign to boost investment in manufacturing, which is desperately needed to reduce unemployment. Modi said the project would be a big boost to the economy and jobs.

Foxconn shares climbed 1.3 percent on the Taipei market on Tuesday following the announcement, while Mumbai-based Vedanta shares fell 1.4 percent. The latter did not respond to a request for comment.  Other big tech companies have also recently taken steps to expand manufacturing in India.

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Last month, US semiconductor maker Micron (MICR) announced the opening of a new factory in the western state of Gujarat, purported to be the country's first semiconductor assembly and test manufacturing facility.

According to the company, Micron expects to invest up to $825 million over the next few years and create "up to 5,000 new Micron direct jobs and 15,000 new community jobs." It says. 

Foxconn is now moving back regarding the setup of India’s biggest manufacturing of Semiconductor chips but it can lead to some external problems and it will take a long time to set up the plant from scratch also they are not able to fill up the gap that they are facing currently.