NEW DELHI (AP) — Electronics giant Foxconn backed out of a $19.5 billion semiconductor joint venture with Indian mining conglomerate Vedanta Ltd. due to "external issues unrelated to the project," it says, in a potential setback for Prime Minister Narendra Modi's ambitions to build a chipmaking industry.

Hon Hai Technology, known internationally as Foxconn, and Vedanta Limited announced their joint venture to manufacture chips and display panels in India in February 2022. On Monday, Foxconn announced it had mutually agreed to part ways with Vedanta Limited.

"This is not a negative. 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," Taiwan-based Foxconn said in a statement Tuesday.

Vedanta said it has lined up other partners to set up India's first semiconductor foundry to create the chips that are used in mobile phones, refrigerators and cars.

Prime Minister Narendra Modi's government has made building a chipmaking sector a national priority as part of a self-reliance policy to secure stable supplies. It is offering financial incentives of up to 50% of project costs under a $10 billion plan for semiconductor and display manufacturing projects.

India's government leaders say they aren't too worried about the impact.

Minister of Electronics and Information Technology Ashwini Vaishnaw said both companies are committed to India's semiconductor mission, part of the country's Make in India program to foster domestic development.

Rajeev Chandrasekhar, junior minister for Electronics and Information Technology, said Tuesday that Foxconn's decision will have no impact on India's goals for semiconductor fabrication. "Both Foxconn and Vedanta have significant investments in India and are valued investors who are creating jobs and growth," he said in a tweet.

Foxconn manufactures Apple iPhones in India, as well as other countries, and plans to expand production in the country, but said it would take time to establish semiconductor operations there.

It has recently rein in other big projects.

Foxconn failed to fulfill grandiose promises to build a massive facility in Wisconsin that would employ thousands of workers. Microsoft agreed to buy a $50 million parcel of land that had been meant for the Foxconn expansion, and the Taiwan company reached a deal with the state government on a scaled back version of the plan.

Electric pickup truck company Lordstown Motors Corp. recently filed for for Chapter 11 bankruptcy protection after warning it was in danger of failing due to a dispute with Foxconn over a $170 million investment in the startup company.

But Foxconn said it would stay in India.

"The group looks forward to growing alongside India's nascent semiconductor industry," it said in a statement Tuesday. The Taiwan-based company said it's working toward applying to the government's Modified Program for Semiconductors and Display Fab Ecosystem and looking for other "optimal partners" and stakeholders both within India and abroad.

Several major investments by U.S.-based companies in India were announced during Modi's visit to Washington in June, which included meetings with top American and Indian executives as the United States tries to foster cooperation with India on artificial intelligence, semiconductor production and space.

Micron Technology agreed to build a $2.75-billion semiconductor assembly and test facility in India, with the American chip company spending some $800 million and India financing the rest. U.S.-based Applied Materials will launch a new semiconductor center for commercialization and innovation in India, and Lam Research, another semiconductor manufacturing equipment company, will start a training program for 60,000 Indian engineers.

Vedanta would be a newcomer to chip making. Its main products are aluminum, copper cathodes, pig iron, iron ore and other metals. The company has been working to reduce a significant stockpile of debt.