HCL Nearing Chip Unit Establishment in Karnataka with an Estimated $400 Million Investment

The HCL Group is progressing towards establishing an Outsourced Semiconductor Assembly and Test (OSAT) facility, commonly referred to as a chip packaging unit, in Karnataka, according to sources familiar with the matter. The facility, described as “small-to-medium sized,” is expected to involve an investment of around $400 million. HCL, renowned for its $12.6 billion IT arm, HCLTech, is actively engaged in discussions with the state government, which has proposed potential locations near the international airport in Bengaluru and in Mysuru.

All About HCL Chip Unit Investment

Officials suggest that Mysuru is considered suitable for semiconductor fabrication (fab manufacturing) and an OSAT, given the availability of water in the riparian district. The state government has devised an incentive structure for the facility, signaling HCL Group’s return to technology hardware—a domain where it is recognized as a pioneer in IT manufacturing in India.

The government is open to further discussions on incentives, as mentioned by an official, and if successful, HCL will join the ranks of recent entrants into the chip OSAT and ATMP (Assembly, Testing, Marking, and Packaging) space, including Micron, Tata Group, Murugappa Group, and Kaynes Technology.

In July, reports surfaced about HCL Group preparing a $300 million proposal for a chip assembly unit, reflecting its longstanding aspirations to enter the semiconductor space. The group had previously explored involvement with semiconductor wafer fab applicant ISMC Analog, but talks eventually fell through. Industry experts view HCL Group’s strategy favorably, particularly considering its acquisition of Sankalp Semiconductor in 2019 and expertise in the chip ecosystem through its IT services arm, HCLTech.

While HCL Group aims to advance its OSAT project, it is anticipated to seek a technical partner to qualify for standard operating procedures (SOPs) under India’s $10-billion semiconductor incentive program, where the central and state governments offer substantial subsidies covering a significant portion of capital expenditure for semiconductor facilities in the country.

This initiative is led by the HCL Group at the corporate level, not HCLTech, and aligns with the central government’s commitment to position India as a preferred destination for the semiconductor ecosystem. The Semicon India Programme, launched under the India Semiconductor Mission (ISM) in December 2021, underscores the government’s goal to develop the semiconductor and display manufacturing ecosystem with a substantial outlay of ₹76,000 crore.