Foxconn ties up with HCL for local semicon assembly
Writer Admin

Foxconn has formed a partnership with HCL Group for semiconductor assembly and testing, which is the second attempt by the Taiwanese company to enter the chip-making space in India.

They will set up an outsourced assembly and testing (OSAT) unit, the two said in separate statements on Wednesday. A total of $100-150 million investment is expected, said government officials in the know.

 

Foxconn’s share in the joint venture will be $37.2 million for 40% stake through Foxconn Hon Hai Technology India Mega Development, a subsidiary of Hon Hai Technologies (Foxconn), it said in a filing. It also told the Taiwan and London stock exchanges that the deal was “a non-binding MoU (memorandum of understanding).”

 

An OSAT unit provides third-party chip packaging and testing to semiconductor fabrication units. Both fabless and fab companies outsource these services to such units to save costs.

 

Vedanta Venture

HCL said the partnership was “an opportunity that provides strategic adjacency to the group portfolio.”

Foxconn, one of Apple’s contract manufacturers, said it was looking forward to “jointly setting up OSAT operations in India with HCL.”

ET first reported in July last year that HCL was close to submitting a formal application for setting up an OSAT unit.

Foxconn’s first attempt at entering the Indian semiconductor ecosystem was a joint venture with the Anil Agarwal-led Vedanta Group ended last year. The Taiwan firm had announced the partnership — to manufacture chips and display panels in India with a total potential investment of $19.5 billion — in February 2022.

It was one of the first ventures off the mark under the key India Semiconductor Mission, for which central and state subsidies cover almost 70-75% of the project’s capital expenditure.

ET had reported then that the government had “issues” with Vedanta's financial health, and had asked Foxconn to scout for other Indian partners. The latter exited the joint venture in July 2023, citing delays, but saying it was still committed to investing in chip-making in the country.


More Investment

For the HCL collaboration, Foxconn said, “The partners aim to build an ecosystem and foster supply chain resilience for the domestic industry. Foxconn will deploy its build-operate-localise model to support local communities.”

“Final terms, including transaction amount, asset details and conditions, will depend on further negotiation,” the company said in its statement. “By regulation, formal announcements will be published when a definitive agreement is reached.”

Foxconn raised its proposed investment from $29.4 million following talks with HCL, according to IT ministry officials.

The tie-up is likely to help Foxconn cement its position as a technology leader in the semiconductor space as well, thereby increasing its options of tying up with core chip fabrication companies.

“Packaging and testing are very adjacent to what Foxconn does,” said Satya Gupta, chief executive of Epic Foundation, a semiconductor-focused, not-for-profit advocacy group. “Getting into OSAT and ATMP (assembly, testing, marking, and packaging) is very meaningful for both partners. The technology is similar to what Foxconn already does, and part of the output of the ATMP plant can be consumed for their own electronics manufacturing activities.”

 

Link