Vedanta’s Stock Drops: Problems with Foxconn’s Semiconductor Partnership Cause Concern, but India Stays Calm, Assures IT Minister

Vedanta Stock Faces Setbacks 3% as Foxconn Ends Semiconductor JV: What It Means for India

Despite a positive sentiment in the domestic market, Vedanta shares have experienced a lackluster performance in recent months. While the stock saw a promising increase of over 21% in the past year, it has taken a downward turn, declining by 12.5% over the last six months.

The latest blow came as Vedanta’s share price plummeted by 2% to Rs 274.90 today following Foxconn’s withdrawal from a $19.5 billion semiconductor joint venture with the company led by billionaire Anil Agarwal. Foxconn clarified that it intends to disassociate itself from the venture completely, stating, “We are working to remove the Foxconn name from what now is a fully-owned entity of Vedanta. Foxconn has no connection to the entity, and efforts to retain its original name will cause confusion for future stakeholders,” according to Hon Hai Technology Group (Foxconn).

In response to Foxconn’s departure, Vedanta affirmed its unwavering commitment to the semiconductor project and revealed plans to collaborate with other partners to establish 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),” stated Vedanta in a released statement.

Addressing the situation, Minister of State for Electronics and IT Rajeev Chandrasekhar emphasized that Foxconn’s decision does not hinder India’s semiconductor fabrication plant goal. In a tweet, Chandrasekhar stated, “This decision of Foxconn to withdraw from its JV with Vedanta has no impact on India’s Semiconductor Fab goals. It’s not for the government to get into why or how two private companies choose to partner or choose not to, but in simple terms, it means both companies can and will now pursue their strategies in India independently, and with appropriate technology partners in Semicon and Electronics.”

Looking at the technical outlook for Vedanta stock, Gaurav Bissa, VP of InCred Equities, explains that the stock has been trading in a consolidation phase since March 2023. It faces resistance at Rs 295 and finds support at Rs 260 levels. The stock is currently trading below the 200-day exponential moving average (ema) on daily charts, resulting in pressure whenever there has been a rise in recent weeks. However, it comfortably stays above the 200-day ema on the weekly charts. Bissa suggests that unless the stock breaks out or breaks down from the range of Rs 260-295, it is advisable to avoid short-term trading.

While Vedanta faces setbacks with the withdrawal of Foxconn, the company remains determined to forge ahead with its semiconductor endeavors. The market will keenly observe how Vedanta navigates this new landscape and collaborates with its new partners to establish India’s first foundry.