TAIPEI -- Foxconn, the world's biggest contract electronics manufacturer, said Thursday it will develop electric vehicles with Fiat Chrysler Automobiles, as the Apple supplier seeks new growth drivers to combat the slowing smartphone industry.
Fiat Chrysler will hold 50% of the venture, while Foxconn will own no more than 40%, the Taiwanese company said. A contract is to be signed this quarter.
"Our initial plan is to manufacture in China for the local market first," with exports possible later, Foxconn said, adding that the venture will also focus on the "internet of vehicles."
China is the world's largest electric-vehicle market. Tesla has opened a so-called gigafactory in Shanghai and recently began delivering EVs.
The operation of Foxconn's EV business will be handled mainly by group subsidiaries FIT Hon Teng, which makes automobile components, and FIH Mobile, Foxconn's Android smartphone assembly arm. FIH Mobile will provide software solutions for automotive systems in electric cars, Foxconn said.
A Fiat Chrysler spokesperson declined to comment.
FIH shrank its smartphone operation last spring, focusing resources on automobile electronics as handset orders dried up, the Nikkei Asian Review reported.
Foxconn and Fiat Chrysler had discussed this collaboration for seven or eight months, two people familiar with the matter told Nikkei. "Fiat Chrysler will be in charge of the carmaking, while Foxconn supports the electronics know-how including hardware and software," one of the sources said.
Foxconn Chairman Young Liu said at an earnings briefing in June that while the company relies heavily on contract electronics manufacturing, it will focus on three key areas as future growth drivers: electric cars, digital medicine and advanced robotics.
Foxconn enters the car industry as it moves some production outside China, its biggest manufacturing base, amid the trade war between Beijing and Washington.
The fields of electric cars and autonomous driving have drawn big bets from virtually every tech company, as they fear being left out of the emerging competition.
Japanese electronics group Sony surprisingly introduced a prototype for an autonomous car at the CES show in Las Vegas this month. Tesla has become a synonym for high-end electric vehicles, while Google has teamed with automakers to test its self-driving technologies. Huawei Technologies and Apple each are working on autonomous-driving platforms.
Foxconn's full-year 2019 revenue grew less than 1% to 5.33 trillion New Taiwan dollars ($178 billion), the third consecutive year the company achieved record sales but suffered slower growth.