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Semiconductors

Apple supplier Foxconn to buy Taiwanese chip plant in EV push

iPhone assembler keen to secure semiconductors amid global shortage

Foxconn has in the past struggled to expand its presence in the chipmaking industry.   © Getty Images

HSINCHU, Taiwan -- Taiwanese electronics giant Foxconn said on Thursday it will buy a semiconductor plant from a local memory chip supplier for $90 million, marking a major step by the iPhone assembler to secure a source of chips for its nascent electric vehicle business.

Foxconn has made electric vehicles a major focus of its growth strategy as it looks to offset a slowdown in its mainstay consumer electronics segment. Securing supplies of chips is crucial to that goal given the global semiconductor supply shortage, company chairman Young Liu has said, and the fact that EVs use far more chips than conventional cars.

The plant belongs to Macronix International, a global leader in specialty memory chips that supplies Nintendo, Sony and Apple. Located in the Taiwanese city of Hsinchu, it is a so-called 6-inch fab, meaning it makes chips on wafers measuring 6 inches in diameter. The plant is considered less advanced than 8-inch or 12-inch chipmaking facilities but could still be suitable for churning out sensors and other electrical components used in automobiles.

The 2.52 billion New Taiwan dollar purchase price includes the facility and equipment, but no transfer of employees is involved. The deal is expected to be completed by the end of the year.

Taiwan's Foxconn announced on Aug. 5 it will buy a local chip plant to further its EV ambitions. (Photo by Lauly Li)

Foxconn Chairman Young Liu told reporters that the chip facility will focus on silicon carbide semiconductors. SiC chips, as they are also known, have high voltage resistance and good heat dissipation. Liu said demand will increase as the EV industry gains ground. SiC chips are also suitable for use in 5G base stations and fast-charging facilities.

The world's leading makers of SiC-related chips are from Europe and Japan; they include Infineon and Rohm.

"This is a great opportunity for us to turn this 6-inch chip plant into a research and development as well as a production base for SiC chips," Liu told reporters on Thursday in Hsinchu.

Liu said Foxconn plans to invest billions of New Taiwan dollars in the coming years to increase the plant's capacity to 15,000 wafers per month beginning in 2024. That would be enough to supply SiC chips for around 360,000 electric vehicles a year. Foxconn's SiC chip facility will compete against and cooperate with existing SiC suppliers, he said.

The purchase of the plant comes after Foxconn in June bought a 5% stake in Dagang NeXchange Berhad (DNex) -- the parent company of Malaysian chipmaker Silterra -- in a deal that secured Foxconn a seat on the board of DNex.

DNex announced on Wednesday it had signed a $400 million deal to supply to China-based chip designer Chip One for driver ICs, touch controllers, and fingerprint chips, which are widely used in smartphones, tablets and electrified vehicles.

While Foxconn is well known as a major iPhone assembler and supplier to HP, Dell and Amazon, it has struggled to expand its presence in the chipmaking industry. To strengthen its capabilities in that area, Foxconn has recruited around 50 employees from TSMC and United Microelectronics over the past few years, Nikkei Asia learned. It also attempted to acquire a chip production plant from Japan's Fujitsu that was eventually bought by UMC in 2019.

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