Foxconn, HCL announce semiconductor JV in India with $37.2 mn investment

Foxconn Technology Group and HCL Group will establish a semiconductor outsourced assembly and testing (OSAT) unit in India, with Foxconn investing $37.2 million for a 40% equity stake

Foxconn Technology Group and HCL Group have announced plans to create a joint venture (JV) for a semiconductor outsourced assembly and testing (OSAT) unit in India. Foxconn is set to invest $37.2 million, securing a 40 per cent equity stake in the venture, according to a report by Mint and The Economic Times. The move aims to establish an OSAT facility to contribute to India's semiconductor industry and enhance supply chain resilience.

HCL Group views this collaboration as strategically aligned with its existing portfolio. The partnership will leverage Foxconn's BOL (build-operate-localise) model, emphasising community support in establishing OSAT operations in India.

The announcement follows the recent revelation by Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar that the government has received nine proposals for various semiconductor fabrication units and testing plants in India. The central government also announced a $10-billion production-linked incentive (PLI) scheme in 2021 to provide financial assistance to semiconductor manufacturers in India.

Micron Technology Inc. has already committed $825 million to its assembly, testing, monitoring, and packaging plans in the country. The Sanand unit of Micron is estimated to create 5,000 direct and 15,000 indirect employment opportunities in Gujarat over the next five years.

Foxconn earlier planned for a semiconductor fabrication unit in partnership with Vedanta Ltd. However, this partnership, which planned to invest $20 billion for the unit, faced a setback last year when the two companies dissolved their joint venture. Despite this, Foxconn remains focused on diversifying from contract manufacturing, with the OSAT business seen as an avenue to improve margins, a spokesperson told Mint.

The JV between Foxconn and HCL Group is currently outlined in a non-binding memorandum of understanding, with negotiations expected to follow. As the semiconductor industry continues to draw interest and investment in India, the collaboration aims to advance the country's semiconductor capabilities.