Strategic move for HCL Group to venture into chip testing and packaging: Roshni Nadar on Foxconn JV

After Vedanta, Tata, Hiranandani, and L&T, yet another Indian multinational conglomerate is foraying into the semiconductor space. Now, Shiv Nadar-founded HCL Group is planning to venture into chip packaging. The company is forming a joint venture with Taiwan-based Foxconn, and the two companies will start with a semiconductor outsourced assembly and testing (OSAT) unit.

Roshni Nadar Malhotra, Chairperson of HCLTech confirmed this development to Business Today. Sharing HCL Group’s decision to enter into OSAT, Roshni Nadar Malhotra said, “I will rewind back a bit. The genesis HCL, starting from 1976 was in manufacturing and was in creating India's first indigenous 8-bit processor-based PC. We shipped the same day as Apple, but we were closed economy, and no one ever covered us. And so, there's been a rich legacy that we've had in engineering services and creating for engineering.”

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While the flagship company of HCL Group today is HCLTech, a forefront player in IT services, the conglomerate boasts a large workforce of about 70,000 to 80,000 people engaged in core engineering and engineering services. A subset of this workforce is dedicated to semiconductor design and flexible manufacturing services, with HCL being actively involved in these domains.

“So, it's not that we're coming at it blindly. We have a certain DNA, we understand the ecosystem. At least, at HCL Technologies, we work will all the top partners. I think today, all of those companies in a standalone basis are looking at India as a market where they want to set up fabs. They're thinking about supply chains. And there's so much manufacturing, that is also moving to India. So, I think that today India is a much more ready market to consume everything that's coming its way. So, for HCL Group, it seemed like a very strategic thing to do, which is to go into the OSAT space.” She is also confident that the company understands services ecosystem around chip OSAT.

Sharing the rationale behind partnering with Foxconn, Nadar Malhotra stated that HCL Group sees Foxconn as a great strategic partner. “A lot a lot of people know them much more for their manufacturing prowess, but a big part of the universe of their manufacturing is the work that they do (is) in semiconductor design.”

For a considerable time, Foxconn has sought to enter chip manufacturing as a natural progression for its existing operations. When the Government of India announced the Semiconductor Scheme with a financial outlay of Rs 76,000 crores in December 2021, Foxconn entered into a joint venture with Vedanta to set up a semiconductor fab. However, after a year and a half, due to the lack of a technology partner, the two companies parted ways. In its joint venture with HCL Group to establish an OSAT, Foxconn will hold 40% equity with an investment of around $37.2 million.