Taiwan’s Foxconn, also known as Hon Hai Precision Industry, has joined forces with India’s HCL Group to establish an Outsourced Assembly and Testing (OSAT) unit for semiconductor chips. Foxconn, through its subsidiary Foxconn Hon Hai Technology India Mega Development Private Limited, is set to invest $37.2 million, securing a substantial 40% stake in the joint venture, as revealed in a regulatory filing to the Taiwanese stock exchanges.
The collaboration aligning with the Indian government’s ‘Make in India’ and ‘Atmanirbhar Bharat’ vision was confirmed on Wednesday (17th January).
The partnership intends to contribute to building a resilient supply chain ecosystem for the domestic semiconductor industry. Foxconn, a global leader in electronics manufacturing and assembler of iPhones, aims to deploy its ‘Build-Operate-Localize’ (BOL) model to support local communities in India.
A spokesperson for HCL Group stated, “HCL Group plans to partner with Foxconn Group to establish OSAT operations in India. HCL Group has a strong engineering and manufacturing heritage, and this is an opportunity that provides strategic adjacency to the Group portfolio.”
This partnership aligns with India’s broader semiconductor ambitions, marked by other proposals in the sector.
Minister of State for Electronics and IT, Rajeev Chandrasekhar recently revealed that the government has received nine proposals for various semiconductor fabrication units, including OSAT facilities. The interest in semiconductor manufacturing in India has surged, with US-based Micron Technology announcing an $825 million investment in assembly, testing, monitoring, and packaging (ATMP) plans in Gujarat.
Despite being characterised as a non-binding memorandum of understanding, officials expect an investment ranging between $100 million to $150 million, subject to further negotiations. The intricate details, including transaction amount, asset particulars, and conditions, will be disclosed upon reaching a definitive agreement.
The proposal is currently under consideration by the India Semiconductor Mission, and industry insiders note the significance of HCL’s expertise in semiconductor design and testing software. The joint venture holds potential, with HCL’s existing partnerships with major chipmakers and Foxconn’s instrumentation expertise.
Foxconn’s expanding presence in India can be attributed to geopolitical tensions and its eagerness to diversify its operations amid global uncertainties. The company, contributing 68% of total iPhone production in India, received approval for an additional $1 billion investment in a new plant for manufacturing Apple products in Bengaluru.
Foxconn and Vedanta mutually parted ways
Earlier, on 10th July 2023, Foxconn stated that it had terminated its USD 19.5 billion joint venture deal with mining baron Anil Agarwal’s Vedanta Ltd. Reportedly, the venture faced difficulties in securing a technology partner to manufacture chips that are used in mobile phones, refrigerators, and cars. Rumours spread after this decision that Foxconn is leaving India. But the company has expanded its presence in India in the following months and this new OSAT establishment is now announced.
