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

Shiv Nadar-founded HCL Group, which began decades ago as a maker of computer hardware and peripherals before establishing its software credentials globally

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

(Economic Times) : The Shiv Nadar-founded HCL Group, which began decades ago as a maker of computer hardware and peripherals before establishing its software credentials globally, plans an ambitious foray into India’s fast-evolving semiconductor ecosystem, several officials and industry executives aware of the development

The HCL Group is close to submitting a proposal to the Centre to set up an assembly, testing, marking, and packaging (ATMP) unit for semiconductors, they added. The project may cost in the range of $200-$300 million.

HCL will be joining ranks with companies such as Micron that have recently announced a $825-million investment in the country for an Outsourced Semiconductor Assembly and Test (OSAT) plant at Sanand in Gujarat. The cumulative investment in the project is $2.75 billion.

“HCL Group receives and evaluates investment opportunities from time to time. We report these at the appropriate time based on meaningful progress,” an HCL Group spokesperson told ET.

Now, forging a chip partnership is key for the HCL Group to enter the semiconductor value chain.

“They (HCL) plan to submit a proposal... But they will need to strike a partnership with a firm whose chips will be packaged at their unit," a senior government official said, adding that the company would have to submit a business model to the government to receive incentives under the India Semiconductor Mission.

Another official confirmed that talks are ongoing between the company and the government over the proposal.

ATMP/OSAT units are an important link in the semiconductor manufacturing chain as they perform the crucial tasks of testing and packing silicon chips.

Group-Level Initiative :

Officials added that, however, this foray is being driven by the HCL Group and not directly by HCLTech, which is the $12.6-billion IT exports arm of the group.

India’s semiconductor initiative has lately grabbed headline space after Foxconn decided to call off its proposed joint venture with the Vedanta Group. The company would have marked India’s entry into global chip-making, potentially reducing the reliance on Northeast Asia that enjoys a virtual monopoly in semiconductor manufacturing value grid.

HCL will be applying for sops under the $10-billion semiconductor incentive programme.

In this program, the central and state subsidies can go up to as much as 75% of the capital expenditure incurred by companies that set up chip manufacturing units in the country.

One of the officials said that it may be strategic for HCL to enter the semiconductor manufacturing ecosystem in the country as they already service chip makers like Intel at a global level as a software services firm..

-- Economic Times

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