Foxconn, a key manufacturer for Apple, has received an approval from India’s cabinet to build a new 37 billion Indian rupees ($435 million) semiconductor plant in a joint venture with the country’s IT giant HCL Group. The deal is the latest move to reduce Apple’s reliance on China and produce more components in India.
The plant, which will be located near the Jewar airport in the northern state of Uttar Pradesh and is expected to start operating in 2027, will eventually manufacture display driver chips for mobile phones, laptops, automobiles, PCs, and other devices, India’s IT minister Ashwini Vaishnaw said at a press conference in New Delhi on Wednesday. Display driver chips handle how screens show images, text, and videos.
However, since India currently lacks advanced chip fabrication facilities, this plant will not do the chip fabrication immediately but will, at first, be used as a semiconductor assembly and test (OSAT) facility. That means it will be focused on providing packaging and testing services for chips that have been manufactured elsewhere, a senior official confirmed to TechCrunch.
Vaishnaw, however, is hopeful that this is a step towards India developing its own fabs for making the chips that could power Apple devices, starting with the display panel chips that this facility will be testing.
“Once this unit is there, the display panel [manufacturing] will also come to India,” Vaishnaw said, adding that it “will have a capacity of 20,000 wafers per month and can produce 36 million units monthly.”
Nevertheless, the deal is still another step towards Apple diversifying manufacturing away from China and deepening ties with India. This deal announcement has come just days after Apple CEO Tim Cook said one way Apple is handling the trade uncertainties between the U.S. and China was to have India do more manufacturing and assembly.
Cook at that time implied that deepening ties with India would mean that Apple would not be forced to raise prices on its devices due to tariffs, although the company is said to be considering weighing price increases anyway.
Apple has already doubled down on India for locally assembling iPhones that it exports to the U.S. and other markets. The company also plans to broaden its India manufacturing base by making other devices, including AirPods.
The minister did not confirm the specifics of the incentives the Indian government will offer Foxconn in this joint venture. Under the state-run semiconductor scheme, the Indian government provides fiscal support covering up to 50% of the capital expenditure for a company to set up facilities.
In January last year, Foxconn’s subsidiary Hon Hai Technology India Mega Development announced its plans to invest $37.2 million for a 40% stake in the joint venture with HCL.
The latest approval comes eight months after New Delhi greenlit a proposal by Kaynes Semicon, a subsidiary of Bengaluru’s Kaynes Technology, to set up a semiconductor facility in Sanand of the western state of Gujarat with a proposed investment of 33 billion Indian rupees ($386 million).
In February last year, the Indian government approved allocating up to 1.26 trillion Indian rupees ($15 billion) to build the first three semiconductor plants under its $10 billion incentive program announced in 2021, including its first semiconductor fab facility.
The industry is currently anticipating news on what the second phase of the Indian government’s semiconductor incentive program will involve, though Vaishnaw declined to share details on that at Wednesday’s press conference.
