Foxconn, HCL Join Forces to Launch Chip Packaging and Testing Project in India

18 Jan 2024 , 10:42 AM

Foxconn, formerly known as Hon Hai Precision Industry, said that it is collaborating with HCL Group in India to launch a chip packaging and testing project in that nation.

According to a regulatory filing to Taiwan’s stock exchange, Foxconn Hon Hai Technology India Mega Development, a division of the Taiwanese contract manufacturer, will invest $37.2 million for a 40% ownership in the joint venture.

The chip packaging and testing project, dubbed OSAT in the industry, comes after Foxconn, in July, called off a joint venture with India’s Vedanta. HCL Group had previously announced that it was in active talks to establish an OSAT facility with the state government of Karnataka.

An HCL Group representative said in a statement to ET, ‘HCL Group has a strong engineering and manufacturing heritage and this is an opportunity that provides strategic adjacency to the Group portfolio.’

The news follows its recent submission of a new application to establish a semiconductor fabrication unit in India under the government’s ‘modified scheme for setting up of semiconductor fabs in India,’ which aims to expand the nation’s electronics manufacturing industry, which includes semiconductor manufacturing. The Parliament was informed of this development by State Minister for Electronics and IT, Rajeev Chandrasekhar.

The application for the establishment of a semiconductor factory in Taiwan by Foxconn, a contract manufacturer, is being examined by the Ministry of Electronics and Information Technology (MeitY).

These events follow its withdrawal from a joint venture with the Vedanta Group, which intended to invest about Rs 1.5 lakh crore to establish a chip facility in Gujarat.

The world’s biggest assembler of iPhones and other gadgets for international companies, Foxconn, is growing in India as economic uncertainty and geopolitical unrest start to interfere with its core business in China.

With 68% of the overall output, Foxconn has been India’s top producer of iPhones, followed by Pegatron (18%) and Wistron [Tata] (14%). From its factories in India, Foxconn exported approximately 58% of its total iPhone manufacturing, while Pegatron and Wistron exported 80% and 96% of their total iPhone output, respectively.

Foxconn reportedly got permission in December to invest an extra $1 billion in a new plant to produce Apple goods in India. They have already set aside $1.6 billion for the 300-acre land close to Bengaluru’s airport; this investment is in addition to that amount.

This total investment is primarily for Apple in India. According to Bloomberg, Foxconn might utilize some of its investment to produce parts for electric vehicles and other products for other clients.

Apple increased its output significantly from the previous year and produced iPhones in India valued at over Rs 1 lakh crore last year. This includes the Rs 65,000 crore worth of iPhones built in India that were exported between January and December.

According to a January 9 story in the Economic Times, Apple has surpassed the goals set forth in the production-linked incentive (PLI) plan. Depending on the outlay, this might mean that its contract manufacturers receive higher residual rewards.

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