The exit of Foxconn from a $19.5 billion semiconductor joint venture with Vedanta is “credit negative’’ for the latter’s UK parent Vedanta Resources, debt research firm CreditSights said on Thursday.

Earlier this week, Foxconn, announced that it was pulling out from the joint venture with Vedanta while adding that it intends to apply for incentives under the government’s semiconductor production plan. Vedanta Ltd also announced that its chip making plans are intact and that it has lined up partners. The joint venture earlier came under the parent firm but last week Vedanta Ltd took over the special-purpose vehicles.

“Since the semiconductor venture will be now parked directly under Vedanta Ltd (VEDL), we see a higher probability that a good portion of the project funding will come from VEDL,” CreditSights, a part of the Fitch group, said in a note.

Foxconn’s exit from the joint venture will also result in the loss of a partner for VEDL to split the semiconductor chip manufacturing costs, it said.

“Consequently, we expect further strain on the credit metrics and free cash flows of both VEDL and Vedanta Resources Ltd (VRL),” CreditSights noted.

CreditSights added that the split does not increase Vedanta’s immediate funding needs as the investment is long-term in nature .