ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Semiconductors

Foxconn chip tool unit weighs building first-ever US plant

Foxsemicon CEO says higher costs and labor concerns are hurdles

Foxconn unit Foxsemicon specializes in building modules and making parts for chipmaking equipment.(Source photo screenshot from Foxsemicon's website)

MIAOLI, Taiwan -- A Foxconn affiliate and major chip equipment maker is considering building its first-ever factory in the U.S. as more companies heed Washington's call to bring critical tech component manufacturing to home.

"We are actively evaluating our first U.S. plant, but it's not yet finalized," Kevin Chiu, chief executive and president of Foxsemicon Integrated Technology, told Nikkei Asia. "If the plan materializes, it will start from a small-scale production site and will be developing the most high-end and advanced chip tools and parts over there."

Other Asian chip companies, including Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, have already indicated they will build or expand production in the U.S. in response to Washington's concerns over national security and clients' desire for a more localized supply chain.

Building a plant in the U.S., however, would cost at least two and a half to three times more than constructing a similar facility in Taiwan, according to an estimate by Foxsemicon CFO Frank Chen.

Chiu said there are several issues to consider before investing in the U.S. "It could still be a big concern whether we can find enough qualified workers there. Also, we have to discuss with our clients whether they are willing to pay a higher price." Chiu added that his company has not ruled out the possibility of instead increasing production in Taiwan, or expanding to Southeast Asian nations such as Singapore, the Philippines or Vietnam.

Foxsemicon, which specializes in building modules and making parts for chipmaking equipment, counts top chip-related companies Applied Materials, TSMC and Micron among its major customers. The company is an affiliate of Foxconn, the world's biggest electronics manufacturing giant and a key Apple supplier that formally trades as Hon Hai Precision Industry.

Chiu said his company is eyeing a "more balanced production footprint" in the future, including by constructing a $1 billion New Taiwan dollar ($35.2 million) facility in the Taiwanese city of Miaoli. Taiwan currently accounts for 15% of Foxsemicon's production capacity, but that could grow to 40% after a new plant ramps up output from 2022, the company said.

"We are also looking for new land in Taiwan near our headquarters because that is the most ideal plan for expansion," Chiu said. "Looking forward, we will likely have expansion plans for the U.S., China and Taiwan, and we will adjust according to our customers' needs."

The company said it has increased production at its existing plants in China since last year to meet increasing local demand.

In addition to its manufacturing bases in China and Taiwan, Foxsemicon also has service, procurement and sales offices in San Jose and Austin in the U.S.

Chips, which power everything from smartphones to servers to self-driving cars, have become a key battleground in the Washington-Beijing tech war. Lawmakers in the U.S. have introduced bills to bring semiconductor manufacturing onshore, while the European Union is also looking to bolster local production of advanced chips. China, meanwhile, has been investing heavily for years to build up its self-sufficiency in semiconductors. American chipmaker Intel on Wednesday announced it will spend roughly $20 billion to build two new chip facilities in Arizona, in a move to restore U.S. chip manufacturing leadership.

"Glocalization [a portmanteau of global and localization] will be a megatrend, going forward, meaning every major economy wants some most of the critical supplies of components and equipment to be built locally, and every multinational company has to think about how to serve this new world," Jackson Hwang, Foxsemicon' chief strategy officer, told Nikkei.

Chiu echoed that view. "Over the past few years, China is increasing chip production locally ... but we see now and over the next few years that a lot of players are expanding chip production globally in the U.S. and elsewhere."

Semiconductors have become a strategic resource worldwide, and the pandemic has made people all the more aware of the importance of keeping such an important industry onshore, the CEO said.

The world's semiconductor equipment market is set to grow by 15% to more than $76 billion for 2021, Clark Tseng, a research director at SEMI, a global chip industry association, forecasts, citing a "supercycle of chip equipment investment" globally over the next few years.

Beyond its chip equipment business, Foxsemicon is also eyeing growth drivers in building medical equipment and its other automation business. The company announced in February that it is teaming up with SmartBreast Corp., a medical equipment startup, to build breast imaging scanners.

Foxsemicon expects the medical equipment business will also be a key growth pillar beyond 2022, the company said. Foxsemicon's revenue for 2020 jumped 36% to NT$9.94 billion and is expected to continue to grow for 2021.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more