Apple supplier Foxconn pulls out of $19.5 billion India chip project

lead apple Suppliers and Global Manufacturing Powerhouses Foxconn It has pulled out of a $19.5 billion joint venture with Indian firm Vedanta that would have brought semiconductor and display manufacturing to the Indian state of Gujarat.

“Foxconn has decided not to proceed with the joint venture with Vedanta,” the Taiwanese company told CNBC. The move is a major blow to Indian Prime Minister Narendra Modi’s ambitions to transform the country into a global high-tech manufacturing powerhouse.

Foxconn said the decision was “mutually consensual” but it remained “full of confidence” in India’s semiconductor ambitions. Vedanta did not respond to a request for comment.

U.S. companies, including Apple, have urged their suppliers to diversify their supply chains beyond mainland China as geopolitical and economic tensions mount. Foxconn has broken ground on several factories across India, although a $20 billion joint venture with Vedanta was supposed to be one of the largest.

The breakup comes as leaders and business executives in the United States and China walk an uneasy and often dangerous path, both acknowledging their mutual dependence and berating each other.

The U.S. government and major technology companies have begun to openly view China’s technological advancement and manufacturing dominance as a major threat to national security. Some U.S. companies, long victims of Chinese government-sanctioned industrial espionage, are reassessing their operations in China as part of a so-called “de-risking” effort.

Foxconn continues to build other factories across India, including one in Telangana and one in Bengaluru.