Apple’s leading manufacturer, Foxconn, has approved by the Indian Cabinet to build a semiconductor plant worth 37 billion people ($435 million) in a joint venture with the domestic IT giant HCL group. The deal is the latest move to reduce Apple’s dependence on China and produce more components in India.
The factory, located near Jewel Airport in northern Uttar Pradesh and expected to start operation in 2027, will eventually manufacture display driver chips for mobile phones, laptops, cars, PCs and other devices, India’s IT Minister Ashwini Vaishnaw said at a commemorative review meeting in New Delhi on Wednesday. Displays a driver chip that shows how the screen displays images, text, and videos.
However, as India currently does not have advanced chip manufacturing facilities, the plant will not immediately manufacture chips, but will initially be used as a semiconductor assembly and testing (OSAT) facility. This means that senior officials confirmed to TechCrunch are focusing on providing packaging and testing services to chips manufactured elsewhere.
However, Vaishnaw hopes that this is a step in India starting with the display panel chips the facility will test, and developing its own fab to create chips that can power Apple devices.
“If this unit exists, the display panels (manufacturing) will also come to India,” Vaishno said, adding that “we have 20,000 wafers a month and can produce 36 million units per month.”
Nevertheless, the deal is another step towards diversifying Apple, which is to diversify its manufacturing industry away from China and deepen its ties with India. The announcement of the transaction came days after Apple CEO Tim Cook said that Apple would be to have more manufacturing and gatherings in India in one way Apple handles trade uncertainty between the US and China.
Culinary at the time implies that deepening ties with India means Apple won’t be forced to raise the price of its devices due to tariffs, but it is said that the company is considering increasing prices anyway.
Apple has already doubled in India to locally assemble iPhones exported to the US and other markets. The company will also expand its manufacturing base in India by manufacturing other devices, including AirPods.
The minister did not review details of the incentives for the Indian government to provide Foxconn at the joint venture. Under the state-run semiconductor scheme, the Indian government provides financial support covering up to 50% of the company’s capital expenditure to establish facilities.
Last January, Foxconn subsidiary Hon Hai Technology India Mega Development announced plans to invest $37.2 million in a 40% stake in the joint venture with HCL.
The latest approval will establish a semiconductor facility in Sanand, Gujarat, eight months after New Delhi Greenlight by Cainz Semicon, a subsidiary of Cainz Technology in Bengaluru, and propose an investment of 33 billion Indian rupee ($386 million).
Last February, the Indian government approved allotting up to 1.26 trillion Indian rupees ($15 billion) under a $10 billion incentive program announced in 2021, including the first semiconductor fab facility.
The industry is currently anticipating news on how the second phase of the Indian government’s semiconductor incentive programme will be involved, but Vaishnaw declined to share the details at a press conference on Wednesday.