The Indian cabinet has approved Foxconn, a major Apple supplier, to establish a new semiconductor plant in a joint venture with the nation’s IT behemoth HCL Group, valued at 37 billion Indian rupees ($435 million). The agreement is the most recent step to increase Indian component production and lessen Apple’s dependency on China.
India’s IT minister Ashwini Vaishnaw stated at a press conference in New Delhi on Wednesday that the plant, which is anticipated to begin operations in 2027 and will be situated close to the Jewar airport in the northern state of Uttar Pradesh, will eventually produce display driver chips for smartphones, laptops, cars, PCs, and other devices. Display driver chips control how text, images, and videos appear on screens.
However, this plant will initially serve as a semiconductor assembly and test (OSAT) facility before beginning chip manufacture, as India currently lacks sophisticated chip fabrication facilities. According to a senior official who spoke to TechCrunch, this suggests that its primary focus will be on offering testing and packaging services for chips that were produced in other locations.
Nonetheless, Vaishnaw is optimistic that this is a step in the right direction for India to build its own factories to produce the chips that might power Apple devices, beginning with the display panel chips that this facility will test.
This plant “will have a capacity of 20,000 wafers per month and can create 36 million units monthly,” Vaishnaw stated, adding that “the display panel [production] would also come to India once this unit is there.”
However, the agreement is only one more step in Apple’s strategy to diversify its manufacturing outside of China and strengthen its relationship with India. This agreement was announced just days after Tim Cook, the CEO of Apple, stated that outsourcing additional production and assembly to India is one way Apple is addressing the trade concerns between the United States and China.
At the time, Cook suggested that strengthening connections with India might prevent Apple from having to hike product pricing because of tariffs, though the company is reportedly already considering doing so.
In order to domestically assemble iPhones that it exports to the United States and other markets, Apple has already doubled down on India. Additionally, the business intends to expand its manufacturing base in India by producing additional gadgets, such as AirPods.
The details of the incentives the Indian government will provide Foxconn in this joint venture were not confirmed by the minister. The Indian government offers financial assistance for up to 50% of a company’s capital expenditures for facility setup under the state-run semiconductor plan.
Hon Hai Technology India Mega Development, a Foxconn affiliate, declared in January of last year that it will invest $37.2 million for a 40% share in the joint venture with HCL.
Eight months have passed since New Delhi approved a plan by Kaynes Semicon, a division of Bengaluru’s Kaynes Technology, to establish a semiconductor plant in Sanand, Gujarat, western India, with an estimated investment of 33 billion Indian rupees ($386 million).
Under its $10 billion incentive package announced in 2021, the Indian government approved allocating up to 1.26 trillion Indian rupees ($15 billion) in February of last year to build the first three semiconductor factories, including its first semiconductor fab facility.
Vaishnaw declined to provide details during Wednesday’s press briefing, but the sector is presently waiting for word on what the second phase of the Indian government’s semiconductor incentive program will include.
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