Foxconn, a key supplier for Apple, has secured approval from the Indian government for a $435 million semiconductor plant in a joint venture with IT giant HCL Group. The new facility, located near Jewar airport in Uttar Pradesh, is expected to begin operations in 2027. The plant will focus on manufacturing display driver chips for various devices, including mobile phones, laptops, automobiles, and PCs.

The display driver chips are critical in controlling how images, text, and videos are displayed on screens. This move is part of a larger strategy to reduce Apple’s dependence on China and expand its production footprint in India.

Semiconductor Assembly Facility to Begin Operations First

While the facility will eventually manufacture its own display chips, it will initially operate as a semiconductor assembly and test (OSAT) unit. This means it will offer chip packaging and testing services for chips produced elsewhere. The development is seen as a significant step toward building a self-sufficient semiconductor manufacturing ecosystem in India.

Ashwini Vaishnaw, India’s IT Minister, expressed optimism that this plant will lay the foundation for India’s future semiconductor manufacturing, specifically focusing on display panel chips. "Once this unit is operational, display panel manufacturing will also come to India," Vaishnaw said.

Foxconn’s Investment Aligns with Apple’s Strategy to Diversify Production

This approval aligns with Apple’s ongoing strategy to diversify its manufacturing operations outside of China. Apple CEO Tim Cook recently mentioned that shifting more production to India is a response to ongoing trade uncertainties between the U.S. and China. This strategic shift could also help Apple avoid raising prices due to tariffs.

Apple has already ramped up its iPhone production in India, and the company plans to expand its manufacturing base by making other products such as AirPods locally. The partnership with Foxconn is another sign of India’s growing importance in Apple’s global supply chain.

Government Support and Fiscal Incentives for Semiconductor Growth

The Indian government has been providing fiscal support to semiconductor companies through its state-run semiconductor scheme, covering up to 50% of the capital expenditure required to set up manufacturing facilities. This support aims to foster India’s ambition of becoming a hub for semiconductor production.

In January 2024, Foxconn’s subsidiary, Hon Hai Technology India Mega Development, announced an investment of $37.2 million for a 40% stake in the joint venture with HCL Group. This move follows a broader government push to support the semiconductor industry, which includes a $15 billion incentive program aimed at developing the sector further.

India’s Growing Semiconductor Industry

The approval of the Foxconn plant follows a similar move by Kaynes Semicon, which is also setting up a semiconductor facility in Gujarat with an investment of $386 million. These moves reflect India's increasing importance as a semiconductor manufacturing base. The government’s ongoing semiconductor incentive program, which includes plans to build its first semiconductor fab facility, is set to further accelerate this growth.

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This article was created with AI assistance.