Foxconn, The world's largest contract electronics manufacturer has been approved by the Indian government to build a semiconductor factory in a joint venture with the HCL Group, investing 3706 crore rupees (US$433 million).

Indian Information Minister Ashwini Vaishnaw said in a cabinet briefing on Wednesday that the factory will be built in Uttar Pradesh, India, and will be put into operation in 2027.

Vaishnaw said the facility will produce Foxconn's display chips, which are used in mobile phones, laptops, cars, PCs and other consumer electronics products.

According to the minister's speech, the factory will be designed to produce up to 20,000 watts of gold cakes and 36 million display driver chips per month. The wafer is a thin circular slice of semiconductor material (usually silicon) that forms the basis of the chip.

This transaction is apple In the ongoing trade tensions between Beijing and Washington, suppliers, including Foxconn, are increasingly turning to India. However, bringing chip production to the country is a difficult and long process.

Taiwan’s Foxconn, officially known as the Hah Hai Technology Group, started producing iPhones in India for the first time in 2019, increasing production capacity in recent years, especially after 2022, in China experiencing pandemic-related production delays.

In 2023, the company has jointly ventured with Indian metal and oil conglomerate Vedanta to establish semiconductor and display production plants in the country as part of a $19.5 billion deal.

Apple has been reportedly working to transfer most of its iPhone production to India as its manufacturing industry in China faces threats from U.S. President Donald Trump’s tariffs on the country.

According to Bernstein analysts, India may account for 15%-20% of total iPhone production by the end of 2025. Evercore ISI estimates that 10 to 15% of iPhones are currently assembled in India.

Although Apple's most important products, such as smartphones and computers, received a waiver of Trump's "reciprocal tariffs" last month, officials warned that the exemption could be temporary.

The U.S. Department of Commerce is investigating the national security investigation into the import of semiconductor technology and related downstream products, which could lead to new tariffs.

During Trump's current semester, the U.S. imports from China at a tax rate of 30%, while in most other countries, including India and Vietnam, the tax rate is 10%.

Analysts have previously told CNBC that Trump's tariff policy is expected to accelerate Apple's efforts to move manufacturing to India.

India has been attracting Foxconn as part of its "semiconductor mission" that aims to build strong chips in the country and demonstrate ecosystems. The Foxconn joint venture will be the sixth semiconductor unit planned to be built under the plan.

- Arjun Kharpal of CNBC contributed to this report.