Taiwanese contract manufacturer Foxconn and Indian conglomerate HCL Group have announced the formation of a joint venture to initiate semiconductor packaging and testing operations in India. As part of the partnership, Foxconn will invest $37.2 million for a 40% stake marking a significant development of India"s growing prominence in the tech supply chain.
Foxconn Hon Hai Technology India Mega Development, a Foxconn subsidiary in the region, is aiming to set up an Outsourced Semiconductor Assembly and Test (OSAT) center. In addition to the OSAT center, Foxconn also received approval to invest around $1 billion more in a plant in India for manufacturing Apple products. This is a significant step towards establishing a manufacturing hub outside China, a trend that we"ve seen in the past as well. The move also resonates with the Indian government"s "Make in India" initiative and is expected to create job opportunities and facilitate skill development in the semiconductor sector in the country.
An HCL spokesman, in a statement to Moneycontrol, said:
“HCL Group has a strong engineering and manufacturing heritage and this is an opportunity that provides strategic adjacency to the Group portfolio".
Back in November, Foxconn had announced to invest $1.5 billion in India. The company had also partnered with Vedanta, a local manufacturing conglomerate, to set up a $20 billion semiconductor fabrication unit in the Indian state of Gujarat. However, in July, Foxconn withdrew from this partnership, citing to seek the most suitable collaborators for its venture instead. Partnering up with HCL signals a strategic pivot towards the Indian market. HCL Group, recognized for its engineering and manufacturing capabilities, had been actively engaging with the Karnataka state government to establish an OSAT facility as well.
More and more countries are pushing for local semiconductor manufacturing to reduce their reliance on China"s fabrications, especially after the pandemic. Semiconductor demand was slightly low in 2023 and also resulted in less than anticipated profits for companies. However, as fabrications and manufacturing units take time to get fully functional, governments and companies are still interested in boosting local supply to prevent another supply chain crunch in the future.
via MoneyControl