HCL-Foxconn to have multiplier effect on electronics manufacturing: Minister

New Delhi/Noida: Union Cabinet on Wednesday approved a Rs 3,706 crore semiconductor plant in UP's Jewar to be set up by an HCL-Foxconn joint venture. It will manufacture display driver chips for mobile phones, laptops, and automobiles.

The semiconductor facility, the country's sixth, will be located on a 48-acre plot in Sector 28 under YEIDA and is expected to create employment for 2,000 people. It will have a design output capacity is 36 million units per month.

"Once this unit is set up, the display panel plant will also come to India. This will meet 40% of the country's capacity and also meet Foxconn's requirements for rest of the world," IT & electronics minister Ashwini Vaishnaw said, adding that the joint venture will become operational in 2027.

The land has been allotted to Vama Sundari Investments (Delhi) Private Limited (VSIPL), a major promoter company of the HCL Group, which holds a 44.17% stake in HCL Technologies.

"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. This plant will manufacture display driver chips for mobile phones, laptops, automobiles, PCs, and a myriad of other devices that have displays. The plant is designed for 20,000 wafers per month," govt said.

Foxconn is the country's biggest manufacturer of electronic products, including having factories for producing Apple's iPhone.

"Semiconductors are basic components. It will have a multiplier effect on the entire electronics manufacturing in the country," Vaishnaw said.

YEIDA CEO Arun Vir Singh said the project reflects UP's push to attract investments in high-tech industries like semiconductor manufacturing. The plant will produce compound semiconductors, silicon photonics, sensor fabrication, discrete semiconductors, and also carry out assembly, testing, marking, and packaging (ATMP), as well as outsourced semiconductor assembly and test (OSAT).

These technologies are critical for the development of next-generation electronics and are expected to contribute to the growth of sectors such as mobile phones, laptops, medical equipment, defence hardware, and power electronics.

To support the project, the Uttar Pradesh govt issued a Letter of Comfort to VSIPL last year, outlining a range of financial and non-financial incentives. As per the commitment, the company will receive a capital subsidy of Rs 919 crore, a land rebate worth Rs 124 crore, and exemption of Rs 1.1 crore in stamp duty and registration charges.

In addition to this, the project will benefit from a 10-year waiver on electricity duty, support for a dual power grid system, and subsidies on water and electricity usage. While the state govt will fund one of the power grids, the company will build the second.

Recognising the need for skilled professionals in the sector, the state will also fund upskilling programmes.

There has been considerable success in development of semiconductor ecosystem in India after the central govt had come up with a Rs 76,000 crore incentive package in December 2021. Under the plan, govt had extended fiscal support of up to 50% of a project's cost to eligible display and semiconductor fabricators.

India, which had previously failed to get any credible proposals for semiconductor manufacturing after trying for decades, had finally managed to score big when American Micron emerged as the first major player to enter the space with a Rs 22,500 crore testing and packaging unit in Gujarat in June 2023. This was followed up with approval to three proposals worth Rs 1.26 lakh crore in February 2024. These are: Rs 91,000 crore project of Tata Electronics Pvt Ltd to set up India's first semiconductor fab unit with Taiwanese Powerchip Semiconductor Manufacturing Corp at Dholera in Gujarat; Rs 27,000 crore Semiconductor Assembly and Test (TSAT) unit by Tata in Morigaon, Assam; and Rs 7,600 crore project of CG Power with Japanese Renesas Electronics and Stars Microelectronics of Thailand.