Foxconn Approved for $435M Apple Chip Project in India

Foxconn and HCL Group to Establish Semiconductor Plant in India

Foxconn, a significant manufacturing partner for Apple, has received approval from the Indian cabinet to construct a new semiconductor plant. This project, valued at 37 billion Indian rupees (approximately $435 million), will be undertaken in collaboration with India’s leading IT firm, the HCL Group.

This venture represents a further effort to lessen Apple’s dependence on China and increase component production within India.

Plant Details and Capabilities

India’s IT minister, Ashwini Vaishnaw, announced at a press conference in New Delhi on Wednesday that the facility, situated near Jewar airport in Uttar Pradesh, is projected to become operational by 2027.

The plant will ultimately focus on the production of display driver chips, essential components for a wide range of devices including mobile phones, laptops, automobiles, and personal computers.

These chips are responsible for controlling the visual output on screens, managing the display of images, text, and video content.

Initial Operations: OSAT Facility

Currently, India lacks the infrastructure for advanced chip fabrication. Therefore, the plant will initially function as a semiconductor assembly and test (OSAT) facility.

This means its primary role will be to provide packaging and testing services for chips manufactured in other locations, as confirmed by a senior official to TechCrunch.

Future Expansion and Fab Development

Vaishnaw expressed optimism that this initial step will pave the way for India to develop its own fabrication facilities, or “fabs,” capable of producing the chips that power Apple devices.

He specifically mentioned the potential for display panel manufacturing to also establish a presence in India following the establishment of this unit.

The facility is anticipated to have a production capacity of 20,000 wafers per month, translating to approximately 36 million units monthly.

Apple’s Diversification Strategy

This agreement signifies another advancement in Apple’s strategy to diversify its manufacturing base away from China and strengthen its relationship with India.

The announcement followed comments made by Apple CEO Tim Cook, who highlighted India’s increasing role in manufacturing and assembly as a means of mitigating trade uncertainties between the U.S. and China.

Cook suggested that increased manufacturing in India could help Apple avoid price increases on its products due to potential tariffs, although the company is still evaluating the possibility of price adjustments.

Expanding Manufacturing in India

Apple has already significantly increased its local assembly of iPhones in India, with a growing portion of these devices being exported to the U.S. and other international markets.

The company also intends to broaden its manufacturing operations in India to include other products, such as AirPods.

Government Incentives and Investment

The specifics of the incentives offered by the Indian government to Foxconn for this joint venture have not been disclosed.

However, under the government’s semiconductor scheme, financial support can cover up to 50% of the capital expenditure required to establish these facilities.

In January of the previous year, Foxconn’s subsidiary, Hon Hai Technology India Mega Development, announced plans to invest $37.2 million for a 40% stake in the joint venture with HCL.

Recent Approvals and Government Programs

This approval comes eight months after New Delhi approved a proposal from Kaynes Semicon, a subsidiary of Kaynes Technology, to establish a semiconductor facility in Sanand, Gujarat, with a proposed investment of 33 billion Indian rupees ($386 million).

In February of the previous year, the Indian government allocated up to 1.26 trillion Indian rupees ($15 billion) to fund the construction of the first three semiconductor plants under its $10 billion incentive program, launched in 2021, including its inaugural semiconductor fabrication facility.