Introduction
In a major boost to India’s semiconductor industry, HCL Group and Foxconn have announced a partnership to set up an outsourced assembly and testing unit (OSAT) for semiconductor chips in the country. The joint venture will leverage the engineering and manufacturing expertise of both the companies and create an ecosystem for the domestic chip industry.
Details
According to a stock exchange filing by Foxconn, its subsidiary Foxconn Hon Hai Technology India Mega Development will invest $37.2 million for a 40% stake in the partnership, while HCL will hold the remaining 60%. This will be Foxconn’s first investment in OSAT operations in India, where it already has a significant presence as a contract manufacturer for Apple, Xiaomi and other electronics brands.
An OSAT unit provides third-party chip packaging and testing services to semiconductor fabrication units. Chip packaging involves enclosing the silicon wafer in a protective casing with electrical contacts, while testing involves checking the functionality and performance of the chip. These processes are essential for ensuring the quality and reliability of semiconductor products.
Significance
The partnership between HCL and Foxconn comes at a time when India is aiming to become self-reliant in semiconductor production and reduce its dependence on imports. The country currently imports more than 90% of its semiconductor requirements, which poses a challenge for its electronics, telecom, automotive and defence sectors.
The government has launched several initiatives to attract investments in semiconductor manufacturing, such as offering incentives, subsidies, tax breaks and land allotments. It has also approved several proposals from domestic and foreign companies to set up chip fabrication units in the country.
The joint venture between HCL and Foxconn will not only cater to the domestic demand for semiconductor chips, but also tap into the global market. The OSAT unit will have the potential to serve customers across various segments, such as consumer electronics, industrial, automotive, medical and aerospace.
The partnership will also create employment opportunities and skill development for the local workforce. HCL Group has a strong engineering and manufacturing heritage, while Foxconn has a proven track record of building and operating large-scale facilities. Together, they will bring world-class technology and best practices to India’s semiconductor industry.