HCL and Foxconn to join hands to set up chip OSAT in India. The JV will require technology partner for setting up OSTA as well, says industry. This news is being looked upon as a positive development for India’s Semiconductor Mission

In a significant development for India’s semiconductor scheme, Indian conglomerate HCL is partnering with Taiwan’s Foxconn to establish a semiconductor outsourced assembly and testing (OSAT) unit in India. Though details about the type of OSAT they plan to build have not been shared, the deal, if approved, could bring incremental growth to India, further enhancing its semiconductor ecosystem.

The JV, just like Micron, would be for testing and packing semiconductor chips. Danish Faruqui, CEO of Fab Economics told Business Today, “OSATs are just like foundries but for assembly, test and packing service. So, any foundry can provide fabricated wafer (output of a fab) and the OSAT can assemble, test and package to finalise the product. Some of the successful OSAT names globally include ASE, Amkor, JCET, among others.”

Satya Gupta, President, VLSI Society explains in this joint venture, “Foxconn can produce the finished chips and use significant output for their dominant electronics manufacturing business. Although HCL started as a hardware company, currently it is mostly doing design services in Semiconductor area and this will help them move up the value chain.”

While Foxconn has expertise in manufacturing, and HCL has been working on the design side, the JV would still require a technology partner to get the government’s approval for incentives. “Even for the OSAT, they will still require a technology partner. But getting plain, vanilla chip packing is not too difficult. If the JV shows the technology and financial models, the application might get approved,” adds independent semiconductor analyst Arun Mampazhy.

But only till the time the JV is not looking into Advanced chip packaging.“ On the technology side, except for very advanced packages the technology for OSAT is much simpler as compared to wafer manufacturing and some of the technology used for OSAT is similar to the EMS business,” adds Gupta.

Fab Economics, the US-based boutique semiconductor Fab/ATMP/OSAT Greenfield projects advisory and implementation practice and semiconductor manufacturing and packaging talent development firm believes the JV for OSAT can pave way for multiple new opportunities for India. “Foxconn- HCL JV to setup OSAT facility in India, is pegged at about 1/3rd of the investment last year announced by Micron for setting up an ATMP unit in India. Hence, we see it as an incremental growth for India for further enhancing its semiconductor ecosystem and not a radical breakthrough. However, Foxconn- HCL JV OSAT brings up multiple new opportunities to India compared to Micron’s ATMP unit,” adds Faruqui.

With the HCL Group also exploring entry into the semiconductor ecosystem after Vedanta, Tata, Hiranandani & L&T, this underscores the commitment of Indian conglomerates. Their involvement has the potential to position India as a significant player in the global semiconductor ecosystem.