Foxconn and HCL Group Form Joint Venture for Semiconductor Packaging Unit

Taiwanese multinational electronics contract manufacturer Foxconn, also known as Hon Hai Precision Industry, has announced a strategic collaboration with India's HCL Group to establish a chip packaging and testing venture within the country. The move marks Foxconn's renewed focus on semiconductor endeavors.

According to a filing on the Taiwanese stock exchange, Foxconn Hon Hai Technology India Mega Development, a subsidiary of Foxconn, will inject $37.2 million into the joint venture, securing a substantial 40% stake.

Additionally, Foxconn has recently submitted applications for the establishment of a semiconductor fabrication unit in India under the Production-Linked Incentive (PLI) scheme. This revelation was disclosed by Rajeev Chandrashekhar, the Minister of Information Technology, during parliamentary sessions in December.

The joint venture with HCL Group signals a fresh chapter for Foxconn in the semiconductor landscape, especially after the dissolution of its previous joint venture with mining conglomerate Vedanta for a chip fabrication unit in July of the preceding year. Notably, Foxconn currently lacks an Indian partner for the fabrication unit it intends to set up.

The collaboration with HCL Group is poised to result in the creation of a Micron-like chip packaging and testing facility in India, offering significant potential for the semiconductor industry's growth in the country.

Foxconn's existing business in India has predominantly revolved around the manufacturing of iPhones, positioning itself as the world's largest assembler of Apple's iconic devices. The company has strategically shifted parts of its operations to India as part of the broader trend among tech firms adopting a China+1 strategy to diversify their supply chains amid escalating tensions between the United States and China.

Foxconn, alongside Tata and Pegatron, serves as a crucial contract manufacturing partner for Apple in India, contributing to a substantial 68% of total iPhone production in the country. In November of the previous year, Foxconn announced an additional investment of $1.6 billion as part of its China+1 strategy.

While specific details of these investments remain undisclosed, it is known that Foxconn is planning to invest ₹8,800 crore in Karnataka to establish an iPhone component unit, generating 14,000 new jobs. Furthermore, the company is exploring additional sites in Tumakuru city, Karnataka, for the production of other iPhone accessories.

HBL