Union Cabinet Approves India’s Sixth Chip Unit Worth Rs 3,700 cr

The Union Cabinet on Wednesday approved the establishment of the sixth semiconductor unit under the India Semiconductor Mission. The new unit will be set up by a joint venture between HCL and Foxconn near the Jewar airport in Yamuna Expressway Industrial Development Authority (YEIDA).

The chip plant is estimated to attract an investment of Rs 3,700 crore, the government said in a statement.

This plant will manufacture display driver chips for mobile phones, laptops, automobiles, PCs, and myriad of other devices that have display. It is designed for 20,000 wafers per month. The design output capacity is 36 million units per month, the government said.

“Already five semiconductor units are in advanced stages of construction. With this sixth unit, Bharat moves forward in its journey to develop the strategically vital semiconductor industry,” the statement added.

HCL has a long history of developing and manufacturing hardware. Foxconn is a global major in electronics manufacturing. Together they will set up a plant near Jewar airport in Yamuna Expressway Industrial Development Authority or YEIDA.

Hailing the approval as a “strategic milestone” in India’s semiconductor journey, IESA President Ashok Chandak said the project will address a critical gap in India’s display and electronics value chain, bringing large scale advanced packaging and testing capabilities for display driver ICs.

“This joint venture lays the foundation for India to emerge as a preferred global hub for semiconductor OSAT operations—truly aligning with the vision of ‘Make in India, Make for the World with great support from center and states,’” Chandak added.

Foxconn, one of the contract manufacturers for Apple, had earlier tried to set up a $19.5 billion joint venture with Vedanta but the plan was set aside in July 2023.

According to industry experts, the local demand for display driver chips that HCL-Foxconn JV will be producing will be huge.

These chips are employed in devices having display such as mobile phones, automobiles, and smartwatches, said Sanjeev Keskar, CEO of Arvind Consultancy.

"About 40% of the Indian electronics market is occupied by smartphones, we make over 20 million two-wheelers, we produce about 5 million cars. All these require display driver chips," Keskar said while highlighting the local demand potential of display driver chips.

Semiconductor industry is now shaping up across the country and world class design facilities have come up in many states, the government said, adding that various state governments are vigorously pursuing the design firms.

As chip manufacturing units are coming up in the country, several ecosystem companies such as Applied Materials and Lam Research are also establishing their facilities in India.

“Applied Materials and Lam Research are two of the largest equipment manufacturers. Both have a presence in India now. Merck, Linde, Air Liquide, Inox, and many other gas and chemical suppliers are gearing up for growth of our semiconductor industry,” the government said.

The cabinet approval to the sixth chip unit comes days after reports that the Adani group has paused its talks with Israel’s Tower Semiconductors for a $10 billion semiconductor unit in Maharashtra. The plan, according to media reports, was shelved as it did not seem strategic and commercial sense for the group.

India's semiconductor market is estimated to grow from $52 billion (Rs 4.5 trillion) in 2024 to $103.4 billion (Rs 9 trillion) by 2030.