India Advances Domestic Chip Production with New HCL-Foxconn Venture in Uttar Pradesh
India's drive to establish a robust domestic semiconductor ecosystem has received another significant boost. The Union Cabinet has given its approval for a joint venture between HCL and Foxconn to establish a chip assembly and packaging unit in Uttar Pradesh. This development marks the sixth project to gain approval under the government's ambitious Rs 76,000 crore India Semiconductor Mission.
The new facility, to be set up near Jewar airport at the Yamuna Expressway Industrial Development Authority, will attract an investment of Rs 3,706 crore. The government will contribute approximately Rs 1,500 crore in incentives as part of its chip manufacturing scheme. This plant is strategically important as it will focus on manufacturing display driver chips. These are essential components for a wide array of devices, including mobile phones, laptops, automobiles, and PCs. The facility is planned to have a capacity of processing 20,000 wafers per month, leading to an output of 36 million units monthly. Union IT Minister Ashwini Vaishnaw announced that production is expected to commence in 2027. It is anticipated that this plant will meet about 40 percent of India's local demand for such chips, with the remainder likely to be utilized by Foxconn in its international manufacturing operations. This venture is projected to create around 2,000 jobs.
This approval represents Foxconn's renewed effort to participate in India's local chip production initiative. An earlier attempt in 2022, a joint venture with Vedanta to set up a semiconductor manufacturing plant, did not materialize, reportedly due to challenges in securing a viable technology partner. However, the current HCL-Foxconn partnership seems to be on a more solid footing.
The upcoming Uttar Pradesh facility will be the first chip plant in the state under the central government's mission. It joins a growing list of semiconductor projects across the country. Four other plants, including a fabrication unit and three assembly units, are being established in Gujarat. Additionally, an assembly and packaging plant is currently under construction in Assam.
Despite initial setbacks, the government's push for semiconductor manufacturing has gained considerable traction. So far, India has attracted investments worth $18 billion in the first phase of the India Semiconductor Mission. Notable projects include the Tata-PSMC fabrication plant, being built at an approximate cost of $11 billion. Other key investments involve assembly and testing plants by US-based Micron Technology, the Tata Group, Murugappa Group’s CG Power in partnership with Japan’s Renesas, and Kaynes Semicon. Many of these facilities are in advanced stages of construction, with the first made-in-India chips expected to be available later this year.
To further accelerate this growth, the central government outlined a $15 billion blueprint for the second phase of the India Semiconductor Mission last August. This phase aims to offer capital support for raw materials and gases essential for chip manufacturing, building on the $10 billion outlay of the first phase approved in December 2021. The HCL-Foxconn venture in Uttar Pradesh is a clear step forward in India's strategic goal of achieving greater self-reliance in critical semiconductor technology and reducing its dependence on imports.
