Apple supplier Foxconn’s failed India chip venture shows how tough it is for new players

Published

2 years ago

July 24, 2023

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This month, Foxconn pulled out of its joint venture with Vedanta. The two sides “mutually agreed to part ways,” Foxconn said in a statement at the time.

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Foxconn is best known as the main assembler of Apple’s iPhones. But in last couple of years, the Taiwanese firm has made a push into semiconductors, betting that the rise of technologies like artificial intelligence will boost demand for these chips.

But Foxconn’s semiconductor foray has had a tough start, highlighting the difficulty for new players to enter a market dominated by established firms with huge experience and a highly intricate supply chain.

“The industry presents newcomers with high barriers to entry, mainly high levels of capital intensity and access to coveted intellectual property,” Gabriel Perez, ICT analyst at BMI, a unit at Fitch Group, told CNBC via email.

“Established players such as TSMC, Samsung or Micron count with several decades of R&D (research and development), process engineering and trillions of dollars in investment to reach their current capabilities.”

Why is Foxconn getting into semiconductors?

Foxconn, officially known as Hon Hai Technology Group, is a contract electronics manufacturer that assembles consumer products like iPhones. But in the last two years, it has stepped up its presence in semiconductors.

In May 2021, it formed a joint venture with Yageo Corporation, which makes various types of electronic components. That same year, Foxconn bought a chip plant from Taiwanese chipmaker Macronix.

The biggest ramp-up in effort came last year when Foxconn agreed with Indian metals-to-oil conglomerate Vedanta to set up a semiconductor and display production plant in India as part of a $19.5 billion joint venture.

Why India?

Foxconn looked to India for its joint venture with Vedanta because the country’s government is looking to boost its domestic semiconductor industry and bring manufacturing on shore.

“Foxconn’s decision to establish a JV in India responds to two key trends – one of them being the market’s growing role as a consumer electronics manufacturing hub, the second one being India’s ambitions – mirroring other major markets such as the US, the EU and Mainland China – to develop its domestic semiconductor industry through public subsidies and regulatory incentives,” BMI’s Perez said.

What went wrong for Foxconn?

This month, Foxconn pulled out of its joint venture with Vedanta. The two sides “mutually agreed to part ways,” Foxconn said in a statement at the time.

“There was recognition from both sides that the project was not moving fast enough, there were challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project,” Foxconn said.

Deadlocked talks with European chipmaker STMicroelectronics, which was the technology partner for the project, was one major reason for the venture’s failure, Reuters reported this month.

Foxconn and Vedanta wanted to license the technology from STMicro and India wanted the firm to have a stake in the joint venture, but the European chipmaker did not, Reuters reported.

It’s hard to break into chipmaking

Foxconn’s hurdles point to a broader issue — it’s hard for newcomers to get into semiconductor manufacturing.

The manufacturing of chips is dominated by one player — Taiwan Semiconductor Manufacturing Company, better known as TSMC — which has a 59% market share in the foundry segment, according to Counterpoint Research.

TSMC doesn’t design its own chips. Instead, it makes these components for other companies like Apple. TSMC has had more than two decades of experience and billions of dollars of investment to get to where it is.

TSMC also relies on a complex supply chain of companies that make critical tools to allow it to manufacture the most advanced chips in the world.

Foxconn and Vedanta’s effort appeared to rely heavily on STMicro, but once the European company bailed, the joint venture was without much expertise in semiconductors.

“Both companies … lacked the core competency of manufacturing a chip,” Counterpoint Research’s Shah said, adding that they were dependent on third-party technology and intellectual property.

Foxconn’s attempts to crack the semiconductor space highlight how difficult it is for a new entrant to do so — even for a $47.9 billion giant.

“The semiconductor market is highly concentrated with few players which have taken more than two decades to evolve to this point,” Shah said, adding that there are high barriers to entry, such as large amounts of investment and specialized labor.

“On an average, it takes more than two decades to be at the level of skill and scale to be a successful semiconductor manufacturing (fab) company.”

Technology

Stablecoin issuer Circle applies for a national bank charter

Published

3 hours ago

June 30, 2025

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Stablecoin issuer Circle applies for a national bank charter

Traders work on the floor at the New York Stock Exchange (NYSE), on the day of Circle Internet Group’s IPO, in New York City, U.S., June 5, 2025.

Brendan McDermid | Reuters

Stablecoin issuer Circle Internet Group has applied for a national trust bank charter, moving forward on its mission to bring stablecoins into the traditional financial world after the firm’s big market debut this month, CNBC confirmed.

Shares rose 1% after hours.

If the Office of the Comptroller of the Currency grants the bank charter, Circle will establish the First National Digital Currency Bank, N.A. Under the charter, Circle, which issues the USDC stablecoin, will also be able to offer custody services in the future to institutional clients for assets, which could include representations of stocks and bonds on a blockchain network.

Reuters first reported on Circle’s bank charter application.

There are no plans to change the management of Circle’s USDC reserves, which are currently held with other major banks.

Anchorage Digital is the only other crypto company to obtain such a license.

Circle’s move comes after a wildly successful IPO and debut trading month on the public markets. Shares of the company are up 484% in June. The company is also benefiting from a wave of optimism after the Senate’s passage of the GENIUS Act, which would give the U.S. a regulatory framework for stablecoins.

Having a federally regulated trust charter would also help Circle meet requirements under the GENIUS Act.

“Establishing a national digital currency trust bank of this kind marks a significant milestone in our goal to build an internet financial system that is transparent, efficient and accessible,” Circle CEO Jeremy Allaire said in a statement shared with CNBC. “By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure.”

“Further, we will align with emerging U.S. regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the U.S. dollar, and support the development of crucial, market neutral infrastructure for the world’s leading institutions to build on,” he said.

Don’t miss these cryptocurrency insights from CNBC Pro:

Technology

Meta shares hit all-time high as Mark Zuckerberg goes on AI hiring blitz

Published

6 hours ago

June 30, 2025

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Meta shares hit all-time high as Mark Zuckerberg goes on AI hiring blitz

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.

Bloomberg | Bloomberg | Getty Images

Meta shares hit a record high on Monday, underscoring investor interest in the company’s new AI superintelligence group.

The company’s shares reached $747.90 during midday trading, topping Meta’s previous stock market record in February when it began laying off the 5% of its workforce that it deemed “low performers.”

Meta joins Microsoft and Nvidia among tech megacaps that have reached new highs of late, all closing at records Monday. Apple, Amazon, Alphabet and Tesla remain below their all-time highs reached late last year or early this year.

Meta CEO Mark Zuckerberg has been on an AI hiring blitz amid fierce competition with rivals such as OpenAI and Google parent Alphabet. Earlier in June, Meta said it would hire Scale AI CEO Alexandr Wang and some of his colleagues as part of a $14.3 billion investment into the executive’s data labeling and annotation startup.

The social media company also hired Nat Friedman and his business partner, Daniel Gross, the chief of Safe Superintelligence, an AI startup with a valuation of $32 billion, CNBC reported on June 19. Meta’s attempts to buy Safe Superintelligence were rebuffed by the startup’s founder and AI expert Ilya Sutskever, the report noted.

Wang and Friedman are the leaders of Meta’s new Superintelligence Labs, tasked with overseeing the company’s artificial intelligence foundation models, projects and research, a person familiar with the matter told CNBC. The term superintelligence refers to technology that exceeds human capability.

Bloomberg News first reported about the new superintelligence unit.

Meta has also snatched AI researchers from OpenAI. Sam Altman, OpenAI’s CEO, said during a podcast that Meta was offering signing bonuses as high as $100 million.

Andrew Bosworth, Meta’s technology chief, spoke about the social media company’s AI hiring spree during a June 20 interview with CNBC’s “Closing Bell Overtime,” saying that the talent market is “really incredible and kind of unprecedented in my 20-year career as a technology executive.”

WATCH: Meta’s AI talent spending spree

Technology

Joby Aviation stock pops 12% after delivering first flying taxi to UAE

Published

7 hours ago

June 30, 2025

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Joby Aviation stock pops 12% after delivering first flying taxi to UAE

An electric air taxi by Joby Aviation flies near the Downtown Manhattan Heliport in Manhattan, New York City, U.S., November 12, 2023.

Roselle Chen | Reuters

Joby Aviation stock soared about 12% as the flying air taxi maker got closer to launching a service in the United Arab Emirates.

The electric vertical takeoff and landing, or eVTOL, company said Monday that it delivered its first aircraft to the UAE and has completed piloted flight tests as it readies for a 2026 launch in the region.

“Our flights and operational footprint in Dubai are a monumental step toward weaving air taxi services into the fabric of daily life worldwide,” said founder and CEO JoeBen Bevirt in a release. He called the Middle East nation a “launchpad for a global revolution in how we move.”

Joby’s planned launch in the UAE was announced in February 2024 as part of an agreement with Dubai’s Road and Transport Authority. The deal included exclusive rights to conduct air taxi service in Dubai for six years.