Foxconn-HCL semiconductor pact; most valuable IT services brands
The HCL group, a prominent IT conglomerate, has collaborated with Taiwanese contract manufacturer Hon Hai (Foxconn) to establish an outsourced assembly and testing unit (OSAT) for semiconductor chips in India.
Details of the deal include an estimated total investment ranging between $100-$150 million, according to government sources cited by ET. Foxconn’s contribution to the joint venture will be $37.2 million, securing a 40% stake through its subsidiary Foxconn Hon Hai Technology India Mega Development.
In simpler terms, an OSAT facility provides third-party services for chip packaging and testing to semiconductor fabrication units. Fabless and chip-fabrication companies often outsource these services to reduce costs.
This marks Foxconn’s second attempt to enter the Indian semiconductor ecosystem, following the conclusion of its joint venture with the Vedanta group in the previous year. The collaboration with Vedanta, announced in February 2022 with a potential investment of $19.5 billion, faced challenges related to Vedanta’s financial health, prompting Foxconn to seek alternative Indian partners.
In 2023, HCL was on the verge of formally applying to establish an OSAT unit.
Experts suggest that this move is likely to solidify Foxconn’s position as a technology leader in the semiconductor space. Satya Gupta, the CEO of Epic Foundation, a semiconductor-focused nonprofit advocacy group, highlighted the significance of entering OSAT and ATMP (assembly, testing, marking, and packaging), stating that the technology aligns with Foxconn’s existing capabilities, and the output from the ATMP plant can be utilized for their own electronics manufacturing activities.
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