This week, the HCL group and Foxconn have unveiled plans for a semiconductor assembly and testing facility in India, aligning with Foxconn’s strategic vision to leverage India’s chip manufacturing incentives. As part of this initiative, the companies are contemplating the establishment of an outsourced semiconductor assembly and testing (OSAT) unit, with potential locations in the states of Tamil Nadu or Telangana.
The OSAT unit is crucial for chip fabrication companies, as it provides third-party chip packaging and testing services. The joint venture’s initial investment is estimated to be approximately USD 150 million (approximately Rs. 1246 crores), excluding any incentives that may be offered by the central and state governments.
According to a recent report from Economic Times (ET), the HCL-Foxconn partnership is in advanced-level talks, indicating that the finalization of the matter is imminent. Both Tamil Nadu and Telangana are reported to have presented attractive incentive structures to entice the establishment of the semiconductor assembly and testing plant.
The choice of location between Tamil Nadu and Telangana is a critical decision for the joint venture. Tamil Nadu may be a preferred option due to Foxconn’s existing widespread presence in the region, potentially resulting in reduced logistic costs. On the other hand, Telangana is said to have put forth an attractive proposal, adding to the complexity of the decision-making process.
The semiconductor industry has witnessed a surge in interest and investments globally, driven by the increasing demand for chips across various sectors, including consumer electronics, automotive, and the Internet of Things (IoT). Governments and companies are recognizing the strategic importance of semiconductor manufacturing and are actively working to establish a robust ecosystem to meet the growing demand.
India, in particular, has been making efforts to become a significant player in the global semiconductor landscape. The government has introduced various initiatives and incentives to attract investments in semiconductor manufacturing, aiming to reduce dependence on imports and bolster the country’s capabilities in this critical technology.
The joint venture between HCL and Foxconn comes at a time when the semiconductor industry is grappling with supply chain challenges and a global shortage of chips. By establishing an OSAT unit in India, the partnership aims to contribute to the local semiconductor ecosystem and meet the rising demand for chip assembly and testing services.
The report indicates that the negotiations are at an advanced stage, suggesting that an official announcement about the location and establishment of the semiconductor assembly and testing facility could be expected in the near future. The outcome of this joint venture and the subsequent investment in semiconductor manufacturing will likely have a significant impact on India’s positioning in the global semiconductor industry and contribute to the country’s strategic goals in technology and innovation.
