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Semiconductors

Foxconn in talks to buy chip plant to support EV ambitions

Key Apple supplier keen to secure components amid global crunch

Foxconn, a key iPhone assembler, is betting on electric vehicles to spur growth as the smartphone market matures. (Source photos by Reuters and screenshot from Macronix International website)

TAIPEI -- Key Apple supplier Foxconn on Tuesday confirmed it is in talks to buy a chip manufacturing plant from a leading Taiwanese memory chipmaker, a move aimed at securing resources for its electric vehicle business amid the global semiconductor supply crunch.

Foxconn Chairman Young Liu told reporters in Taipei on Tuesday that semiconductors will play a crucial role in the company's EV development blueprint. Electric models require far more chips -- including power chips, image sensors and positioning sensors -- than traditional autos.

The plant belongs to Macronix International, a global leader in specialty memory chips that supplies Nintendo, Sony and Apple. Located in the city of Hsinchu, it is a so-called 6-inch fab, meaning it makes chips on wafers measuring 6 inches in diameter.

"Our team has expressed [Foxconn's] interests in their 6-inch fab and will proceed with the talks," Liu said.

The plant is not as advanced as those owned by industry leaders like Samsung and Taiwan Semiconductor Manufacturing Co., which build the most cutting-edge smartphone and computer processors. Nevertheless, the Macronix plant is capable of building a wide range of specialty driver integrated circuits as well as power components -- all of which are currently in extremely short supply for automobiles and other applications.

Despite the talks with Macronix, Foxconn has not given up its pursuit of a chipmaking facility in Malaysia, a slightly more advanced 8-inch wafer production plant belonging to SilTerra Malaysia.

"Either a 6-inch, 8-inch, or specialty fabs are what we are focusing on. In fact, many automotive chips are made using the 6-inch production process," Liu said, explaining why the company was not seeking to acquire more advanced facilities. He added that Foxconn has also applied for semiconductor patents relating to automotive electronics.

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 Corp. over the past few years. It also attempted to acquire a chip production plant from Japan's Fujitsu that was eventually bought by UMC in 2019.

Miin Wu, chairman and CEO of Macronix, said in late March that his company was gradually phasing out production at the 6-inch chip plant in Hsinchu and would ship out the last batch of products by the end of the month. Macronix's chip plant mainly produces driver chips and power management chips, both of which are more mature technologies.

"It is up for sale," Wu said at the time. "We are still in discussions with potential buyers, and it's likely there will be an outcome and decision in the April-June period."

Wu added that his company will target more profitable chip products for medical, automotive and industrial applications.

Local online news source Investors.com said Japan's Tokyo Electron is interested in buying the plant's used chipmaking equipment.

Macronix declined to comment on Foxconn's latest remarks or provide information regarding any other bidders.

Foxconn's push into semiconductors comes as the chip and component crunches have disrupted industries ranging from smartphones and home appliances to automobiles.

Liu said Foxconn, the world's biggest contract electronics maker and a barometer of tech industry demand, foresees a "wider range" of shortages this quarter compared with last month.

"We received all kinds of rush orders from all of our clients across sectors and many have expressed a widening range of chip shortages," Liu said. The impact on shipments of existing orders will be around 10%, and that on rush orders "will be [even] bigger."

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