Foxconn has announced a partnership with India’s HCL Group to establish a chip packaging and testing venture, marking a significant investment in India’s growing semiconductor industry.
The Taiwanese contract manufacturer’s unit, Foxconn Hon Hai Technology India Mega Development, will invest $37.2m (Rs.3.09bn) for a 40% stake in the joint venture, according to a regulatory filing.
In a statement to Moneycontrol, HCL Group representative said: “HCL Group has a strong engineering and manufacturing heritage and this is an opportunity that provides strategic adjacency to the Group portfolio.”
The venture follows Foxconn’s recent application to set up a semiconductor fabrication unit in India under the “modified scheme for setting up of semiconductor fabs in India.”
This government scheme is part of a broader effort to enhance the country’s electronics manufacturing sector.
Currently, Foxconn’s application for the semiconductor factory is being reviewed by the Ministry of Electronics and Information Technology.
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“Foxconn has to bring in technology. They have to establish that they have the technology to manufacture semiconductors. The process of verifying the technology and so on is currently underway at the ministry,” an Indian government official told the publication.
The new chip packaging and testing operation, referred to as an outsourced assembly and testing (OSAT) unit in industry terms, emerges after Foxconn’s withdrawal from a previous joint venture with India’s Vedanta Group.
The abandoned project involved plans to establish a chip plant in Gujarat, with an investment of approximately Rs1.5trn (approximately $18bn).
OSAT units are essential in the semiconductor industry, offering third-party services for chip packaging and testing, which helps both fabless and fab companies reduce costs by outsourcing these processes.
Foxconn, recognised as the world’s largest assembler of iPhones and a key manufacturer for various global electronics brands, is expanding its presence in India.
This expansion comes as the company seeks to diversify its operations amidst the ongoing geopolitical tensions and economic uncertainties that have impacted its primary operations in China.