'We have a certain DNA': HCL's Roshni Nadar on JV with Foxconn for chip packaging and testing facility in India

HCL Group, parent firm of HCLTech, has partnered with Taiwanese giant Foxconn for semiconductor assembly and test operations in India. In an exclusive interview with Business Today soon after this announcement by Foxconn, HCLTech Chairperson Roshni Nadar on Wednesday said that HCL has certain DNA and understands the chip ecosystem. She said the genesis for HCL starting from 1976 was in manufacturing and was in creating India's first indigenous 8 bit processor-based PC.

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"We shifted the same day as Apple, but we were a closed economy, so no one ever covered us. And so there's been a rich legacy that we've had in engineering services and creating core engineering. The avatar of the HCL Group, as it exists today, is obviously having HCL Technologies as our flagship company in the forefront in IT services. But we've also got a very large workforce about 70,000 to 80,000 people who are working in core engineering and engineering services," she said while speaking with Business Today's Executive Director Rahul Kanwal and Business Today TV's Managing Editor Siddharth Zarabi in Davos.

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A subset of that, she said, is the group does a lot of work in semiconductor design and manufacturing. "So it's not that we're coming at it blindly. We have a certain DNA. We understand the ecosystem. We work at technologies with all the top partners. And I think today all of those companies in a stand-alone basis are looking at India as a market where they want to set up fabs," Nadar said when asked about HCL's partnership with Taiwanese major Taiwanese.

She said the several companies are thinking about supply chains, and there's so much of 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."

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The HCLTech chairperson, who is in Davos for the World Economic Forum's (WEF) annual meeting, said that HCL sees Foxconn as a 'great strategic partner'. "A lot of people know, they're much more for their manufacturing prowess, but a big part of the universe of their manufacturing is the work that they do in semiconductor design." Foxconn is the largest contract manufacturer for Apple.

In December 2021, the Modi government committed Rs 76,000 crore to catalyse the semiconductor manufacturing ecosystem in India. However, not much progress has been made on that front so far even though Vedanta, Tata, Hiranandani, and L&T have announced their plans to enter this space. Foxconn had announced its joint venture with Vedanta Ltd to make semiconductors in India but it later pulled out of the deal.

When asked about things moving very slowly, Nadar said: "Maybe, but I don't know how many of the announcements and collaborations that have been made - where on the other side, there is a tech partner sitting. So I think that maybe that helps scale it much understand faster because we understand the universe and we're going to be in the area of high tech and assembly and testing."

She said HCL understands the services ecosystem, which is around the semiconductor ecosystem. She said there are many states in India and it's no longer isolated to just one or two states where there is at least a push on manufacturing. "So wherever there's going to be manufacturing, especially electronics manufacturing, whether it's in high-tech or whether it's in just our devices, you're going to need chip design and you're going to need assembly and testing, which is closer. So I think the entire ecosystem will build pretty well."

Globally, a push has been made to diversify chip supply chains as the world heavily relies on Taiwan - a self-ruled island over which many fears a conflict may break out between China and the US if Beijing moves to unify the territory.

Rahul Kanwal asked Nadar whether chip move was to cater to the demand in the Indian market or a some kind of a cushion for global supply chains considering China's assertive move vis a vis China. 

To this, Nadar said it was not fair to always look at India as a 'China-plus one' strategy. "I think today we are as large, if not larger consuming market as China, and we, at least in our universe of IT services, are the largest provider of services and its own economy just not even to India but to the rest of the world. So I think, all the push that India is having not just semiconductor and design, but also in manufacturing is to be a marketplace for the rest of the world and not necessarily a substitute for any other."