The De-Risking Play: What India Chip Tells Us About the Future of Global Manufacturing
Written by Kfir Kedem
For decades, the world's electronics supply chain has run through China, where low costs, massive scale, and deep manufacturing expertise made it the default home for producing everything from smartphones to semiconductors. That dependency is now being actively unwound, driven by tariffs, sanctions, and a growing consensus among governments and corporations that concentration in a single country is a strategic liability. The Foxconn and HCL Group joint venture to manufacture display chips in India is a small but telling example of where that shift is heading.
Foxconn and HCL Group have announced a joint venture called India Chip Pvt Ltd. The purpose of this partnership is to manufacture display chips that are used in phones, laptops, PC, cars, and other such products. It is also expected to create 3,500 in Uttar Pradesh. This partnership has an ownership of 40% Foxconn and 60% HCL Group with an investment of $37.2M (with up to $46.7M possible to reach) from Foxconn and an additional $407,000 and a combined total investment of up to $47.1M. It is expected that there will be a monthly capacity of 20,000 wafers.
Foxconn was established in Taiwan and is the world’s largest electronics manufacturer with over 40% market share in electronics manufacturing services. They are also especially known for being the primary assembler of Apple’s iPhone. The company has a goal of exporting mobiles phones worth $10B out of India by 2030.
HCL Group has multiple divisions under its umbrella. Under HCLTech, the company has over 25 years of experience in the semiconductor industry. They have also partnered with other chip manufacturers to develop and produce automotive and phone chips. Until now however, HCLTech was solely a service provider – giving access to their labs, partnering for design, etc. With India Chip, the company will be directly manufacturing its chips for the first time.
What stands out to me is how measured Foxconn's commitment is. At $37.2M, this is not a bet-the-farm investment for a company of Foxconn's scale. It reads more as a strategic foothold than a full conviction play, likely designed to satisfy India's localization narrative while keeping exposure limited until demand signals are clearer. The 60/40 ownership split in HCL's favor reinforces this. Foxconn gets the supply chain optionality without carrying the majority of the risk. For automotive procurement specifically, the opportunity is real and the path to adoption is more straightforward than it might appear. Foxconn's customers will not be navigating a new supplier relationship. They will simply see India Chip absorbed into Foxconn's existing manufacturing footprint, making adoption largely frictionless on the demand side.
This partnership is coming at a crucial time in which the United States, and in turn American companies abroad, are working hard to reduce dependency on China, coming in the form of tariffs, sanctions, and government regulations on American businesses. India has for some time been at the forefront of the conversation as a superpower of production capacity and cheap labor and a worthy replacement for the dependency on China. One example can be shown by Apple launching production of iPhones in Bengaluru in 2025. This production was done by Foxconn together with Tata.
Beyond the geopolitical timing, there are also evident supply chain benefits. Although not official, some companies can immediately be pointed to as potentially gaining benefits from India Chip:
Company | Type | Country | Connection to India Chip JV | Incentive to Use India Chip |
Foxconn (internal) | EMS / JV Partner | Taiwan | 40% owner of India Chip; assembles iPhones in India via separate Foxconn facilities | Strongest incentive of all — strategically logical to close the loop by packaging display driver chips in India for devices assembled in India; reduces import dependency and strengthens India manufacturing narrative for Apple |
Tata Electronics | EMS | India | Apple's other major iPhone assembler in India; rapidly scaling capacity | Government pressure to localise supply chain; sourcing display chips from India Chip would align with Make in India obligations and reduce forex spend on imports |
Dixon Technologies | EMS | India | India's largest listed EMS company; assembles phones, laptops, TVs for multiple brands | PLI scheme incentivises local component sourcing; buying domestically packaged chips could improve Dixon's PLI benefit calculations |
Apple | OEM | USA | Drives demand through Foxconn and Tata Electronics in India | Indirect but powerful — as Apple deepens India manufacturing, India-sourced components become strategically attractive; reduces single-country (China/Taiwan) concentration risk in its supply chain |
Maruti Suzuki | Automotive OEM | India | Largest car maker in India; vehicles increasingly display-heavy | Government's Atmanirbhar Bharat push creates pressure to source components locally; automotive display chips are a growing need as even entry-level Indian cars add infotainment screens |
Tata Motors | Automotive OEM | India | Makes passenger vehicles and commercial vehicles; owns Jaguar Land Rover | Dual incentive — Indian domestic vehicles need locally sourced chips; JLR's premium vehicles need high volumes of automotive-grade display drivers |
Hyundai India | Automotive OEM | South Korea | Major India car manufacturer; recently IPO'd Indian subsidiary | India operations increasingly autonomous; local chip sourcing aligns with government expectations and reduces import bill |
Mahindra & Mahindra | Automotive OEM | India | Fast-growing EV and SUV maker; display-heavy cabin designs | Strong government alignment; Mahindra has explicitly committed to India-first supply chains as part of its EV strategy |
Samsung Electronics India | OEM | South Korea | Manufactures smartphones and TVs in India (Noida factory is one of world's largest phone plants) | Already under pressure to localise supply chains as a condition of India market access; sourcing display chips locally would directly support this |
Xiaomi / OPPO / Vivo India | OEM | China | All assemble phones in India; collectively account for large share of Indian smartphone market | Indian government has scrutinised these companies closely over local content and financial compliance; demonstrably sourcing from Indian semiconductor facilities would be politically advantageous |
Indian Railways / ISRO / Defence | Government / PSU | India | Government entities with growing need for display technology in control systems, signage, and instrumentation | Government procurement rules increasingly mandate locally sourced components; India Chip would be a natural beneficiary of public sector electronics procurement reform |
Strategically, multiple global chip designers gain a major benefit by having manufacturing close to their Indian design centers. OSAT, or Outsourced Semiconductor Assembly and Testing, refers to third-party facilities that package and test chips after they are designed:
Company | Country | Benefit |
AMD | USA | Largest global design center in Bengaluru; India manufacturing capability completes the design-to-chip loop |
NXP Semiconductors | Netherlands | Scaling India design centers; automotive chip design pairs directly with automotive OSAT demand |
Renesas | Japan | Already in India OSAT via CG Power JV; India Chip expands the ecosystem they're betting on |
Micron Technology | USA | Building own India OSAT facility; India Chip validates and de-risks the same market |
The Foxconn and HCL joint venture is modest in size but significant in what it represents: a concrete step in the broader restructuring of global electronics manufacturing away from China and toward a more distributed supply chain. For India, it is one more piece of an increasingly credible case that it can be not just a market, but a manufacturer.
Sources:
Comments