The Union Cabinet has approved a joint venture between HCL and Foxconn to set up a chip assembly and packaging unit in Uttar Pradesh, making it the sixth project to receive approval under the government’s ambitious Rs 76,000 crore India Semiconductor Mission.
The plant will attract an investment of Rs 3,706 crore, with around Rs 1,500 crore coming from the government’s kitty as part of incentives under the chip manufacturing scheme. This plant will manufacture display driver chips for mobile phones, laptops, automobiles, PCs, and other devices which include a display. The facility will be designed for 20,000 wafers per month, and will have an output capacity of 36 million units each month.
This is Foxconn’s second attempt at making a foray into India’s local chip production push. In 2022, the company had applied for a semiconductor manufacturing plant along with Vedanta, however, that joint venture fell apart a year later in 2023 after the two could not find a viable technology partner.
The plant will be set up near Jewar airport at the Yamuna Expressway Industrial Development Authority in Uttar Pradesh. This is the first chip plant that will come up in the state under the centre’s India Semiconductor Mission. Four plants – including a fab and three assembly units – are coming up in Gujarat and one assembly and packaging plant is under construction in Assam.
Union IT Minister Ashwini Vaishnaw said that the plant will start rolling out chips in 2027. It will be able to meet around 40 per cent of India’s local demand for such chips, and the rest would be used by Foxconn in its foreign manufacturing facilities as well.
When Foxconn, which also assembled Apple iPhones in India, had first applied to build a fabrication plant in the country nearly three years ago along with Vedanta, it was hailed as a major marker of initial success for the Centre’s chip push. However, soon, differences emerged between the two partners, and the joint venture fell through in 2023. It is understood that the ability of Vedanta, which is reeling under a heavy debt load, to pay for acquiring the necessary technology for chipmaking played a key role at the time.
However, since that initial hiccup, the government has managed to attract five chip manufacturing and assembly facilities in the country. The country has so far attracted investment worth $18 billion under the first phase of the India Semiconductor Mission. This includes the Tata-PSMC fab, being built at a cost of roughly $11 billion, along with assembly and testing plants by US-based Micron Technology, the Tatas, Murugappa Group’s CG Power in partnership with Japan’s Renesas, and Kaynes Semicon. These facilities are in an advanced stage of construction, with the first made-in-India chip expected to roll out later this year.
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Last August, The Indian Express had reported that the Centre had created a fresh $15 billion blueprint for the second phase of the India Semiconductor Mission. Under the renewed scheme, the government was planning to offer capital support for raw materials and gases used in chip manufacturing, this paper had reported. The first phase had an outlay of $10 billion, and was approved in December 2021 to kickstart India’s chip industry.
