Foxconn to invest $600M in Karnataka for iPhone components, chip-making tools projects

Foxconn, a key Apple supplier, will invest $600 million in two projects in Karnataka for chip-equipment manufacturing and casing components for iPhones, the southern Indian state said Wednesday.

The Taiwanese company, which signed a letter of intent with the Karnataka government, said it will invest about $350 million in setting up a plant in the state for manufacturing iPhone case components and about $250 million on a project for semiconductor manufacturing equipment.

“The industrial and investment policies of the state government are conducive to nurturing an ecosystem favouring the growth of industries. The talks held with the company chairman were fruitful,” said MB Patil, Karnataka Minister of Infrastructure Development, in a statement.

Foxconn said the projects will create 13,000 jobs in the state. The firm has partnered with Applied Materials on the semiconductor manufacturing project.

Wednesday’s announcement follows Foxconn signing a deal with the state of Tamil Nadu on Monday to invest about $194 million in a new electronic components manufacturing facility.

Scores of global manufacturers and suppliers have expanded their presence in India as Prime Minister Narendra Modi offers incentives to make India the global semiconductor and hardware manufacturing hub. The past two years saw India unveil considerable production-linked incentives to attract investment in critical sectors, from electronics to automobiles and solar energy.

In recent weeks, the U.S. memory chip firm Micron also announced plans to invest up to $825 million to build a semiconductor plant in India. Similarly, Applied Materials announced an investment of $400 million in June to establish its new engineering center in the South Asian nation. Apple has also accelerated production of its iPhone 14 lineup in the country. But there are also some concerns.

A multibillion-dollar venture between Foxconn and Indian conglomerate Vedanta ended last month. Indian officials blamed “internal issues” between the firms for the discontinuation of the joint venture and said the development will not impact India’s semiconductor goals. Foxconn has since said that it remains committed to India and will apply to avail the incentives.

In 2021, the Modi-led government introduced a $10 billion incentive program to localize production of semiconductors and microchips in the country. The scheme was tweaked recently as the original version did not receive the expected response from global companies. Consequently, a noteworthy shift has occurred, with prominent semiconductor manufacturers and chipmakers now expressing interest in establishing production facilities within the nation’s borders.

A primary motivation driving electronic manufacturers, such as Foxconn, to invest substantial sums in India is the imperative to decrease their dependency on China. The Indian government is actively working towards establishing a domestic ecosystem within the country to cultivate the growing industry interest.

Last week, the federal government hosted the second edition of its annual semiconductor conference in Modi’s hometown in Gujarat where executives from Foxconn, Micron, Applied Materials and AMD participated. AMD also announced its plans to invest $400 million in the country over the next five years at the event.

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