In a move towards enhancing India’s semiconductor capabilities, IT giant HCL Group has partnered with Taiwanese tech leader Foxconn to establish an outsourced assembly and testing unit (OSAT) for semiconductor chips.

What Happened? The joint venture is poised for an investment of around $100-$150 million, with Foxconn reportedly contributing $37.2 million for a 40% stake through its subsidiary Foxconn Hon Hai Technology India Mega Development.

An OSAT facility offers specialized services in packaging and testing semiconductor chips for third parties, including both companies that design chips (fabless) and those that fabricate them. This step is crucial in reducing costs and enhancing efficiency in the semiconductor manufacturing process.

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This collaboration marks Foxconn’s renewed foray into India’s semiconductor scene after its previous joint venture with the Vedanta group concluded last year. The partnership with Vedanta, announced in February 2022, had envisioned a massive $19.5 billion investment, but faced hurdles due to concerns about Vedanta’s financial health, prompting Foxconn to seek new Indian alliances.

Why it matters? The establishment of the OSAT unit, which HCL was on the brink of formally applying for in 2023, is expected to solidify Foxconn’s role as a pivotal player in the semiconductor field.

The work involved in OSAT and ATMP – which includes assembling, testing, marking, and packaging semiconductor chips – is similar to Foxconn’s current operations. Additionally, the products made in the ATMP plant can be used by Foxconn for its other electronics manufacturing projects, making this a beneficial move for them.

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