Foxconn Enters Chip Production with Macronix Deal

Article By : Alan Patterson

Foxconn will gain a competitive advantage over car makers that have been forced to idle production lines because of global chip shortages.

Foxconn, the world’s largest assembler of consumer devices such as Apple’s iPhone, is entering semiconductor production as part of a plan to expand into electric vehicles.

Foxconn recently announced it will acquire a 6-inch silicon wafer plant and equipment from Taiwan-based Macronix International for NT$2.52 billion ($90 million).

For Foxconn, it’s a first step toward chip production. The company plans to use the fab as part of a plan to ramp up manufacturing of high-growth products such as EVs and electronics equipment used for healthcare. Foxconn’s MIH Alliance for EVs has so far attracted more than 1,200 partner companies providing hardware and software. Together, the partners plan to launch an EV kit in October, and a prototype electric bus in 2022.

Another aim of the alliance is to create an open platform for EVs patterned on Google’s Android open-source model for smartphones.

Foxconn said it will use the former Macronix fab to develop and produce semiconductors, especially power components used in electric vehicles, according to company chairman Young Liu. The facility in Taiwan’s Hsinchu Science Park will become the headquarters of Foxconn’s semiconductor business group, Liu added.

The company is targeting EVs as growth slows in its mainstay smartphone business. Foxconn’s expansion into EVs is very likely aimed at existing customers such as Apple, which have up to now lagged Tesla and China’s Nio.

By making its own automotive semiconductors, Foxconn would gain a competitive advantage over car makers that have been forced to idle production lines because of global chip shortages. Having an internal chip supply will help Foxconn reduce production costs through better inventory control.

The company has lined up key auto makers as partners. Fiat Chrysler is planning a joint venture with Foxconn to build electric cars and develop internet-connected vehicles in China.

In January, Foxconn and Chinese automaker Zhejiang Geely Holding Group said they will cooperate on contract manufacturing for other carmakers. Geely owns Volvo, and holds a 9.7percent stake in Daimler.

Foxconn also has a partnership with U.S. carmaker Fisker. The partners plan to start production of EVs by the fourth quarter of 2023. The collaboration may revive Fisker’s presence in the EV business following its unsuccessful Karma model.

Electric vehicles present another opportunity for Foxconn to develop low-cost modules for electronics brands in much the same way it made laptops for Apple and Dell. The difference this time is that Foxconn aims to provide more added value to its partners via advanced display technology stemming from its recent acquisition of LCD maker Sharp.

Foxconn’s entry into chipmaking also represents another milestone for a manufacturer that began making plastic knobs for black-and-white TVs.

This article was originally published on EE Times Europe.

Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.

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