HCL Group weighs $300-million foray into India's semiconductor space

HCL is slated to apply for sops under the $10-billion semiconductor incentive programme.

The HCL Group is contemplating setting foot in India's expanding semiconductor space, as per a July 19 report published in the Economic Times.

As per the newspaper's report, the HCL Group is anticipated to soon submit a proposal to the Centre for setting up an assembly, testing, marking and packaging (ATMP) facility for semiconductors. The project will reportedly be worth $200-300 million. As per senior officials of the company, HCL Group is leading this ambitious project and not HCLTech - the group's $12.6 billion IT exports wing.

Reports say HCL is slated to apply for standard operating procedures (SOPs) under the $10-billion semiconductor incentive programme. Under this scheme, the central and state governments offer subsidies, covering as much as 75 percent of the capital expenditure incurred by firms setting up semiconductor facilities in India.

The latest development comes close on the heels of Micron's announcement early this July of its plans to break ground at its Gujarat semiconductor unit in August. The chipmaker announced a $825-million dollar investment for setting up an Outsourced Assembly and Test (OSAT) facility at Sanand in Gujarat. The cumulative investment in the project is $2.75 billion. Micron's project, in collaboration with the Centre and the Gujarat state government, is likely to catapult the growth of India's chipmaking space.

Also Read: India's first chip production to begin in Micron's Gujarat facility

India's semiconductor dream

The semiconductor sector in India has been witnessing substantial growth for the last couple of years. Moreover, the Narendra Modi government's ambitious mission to build the world's largest semiconductor ecosystem in India is conducive to its growth.

The Centre had announced the ambitious Semicon India Programme under the India Semiconductor Mission (ISM) in December 2021 for developing the semiconductors and display manufacturing ecosystem in India. This programme has a financial outlay of Rs 76,000 crore.

In September 2022, this scheme was modified on industry feedback, to bolster its competitiveness, and relaunched as the ‘Modified Semicon India Programme.’

It is a good time for the country to cement its chipmaking base given the lingering Sino-US trade tiff, and the crippling semiconductor supply chain globally. Moreover, global chipmakers are now eyeing India as the next big host to set up their manufacturing units.

The group's latest decision to enter the semiconductor manufacturing space is being seen as an organic growth strategy given the company's relation with chipmakers, such as Intel.

Last November, it was reported that the company is eyeing a stake in semiconductor wafer fab applicants, ISMC Analog, which has picked an electronics cluster near Karnataka's Mysuru to set up a $3 billion fab.

HCL enjoys a solid presence in the semiconductor space, where it provides lithography, etching, Ion implant, assembly, and packaging, along with testing services globally.