Foxconn, the Taiwanese manufacturing partner of Apple and Nintendo, announced plans to build a semiconductor production facility in Qingdao, China. The factory will handle testing and packaging requirements for the firm’s 5G and artificial intelligence (AI) components. The chipmaker will begin construction on the plant this year with an eye toward a 2021 launch.
Why Foxconn is Establishing a Semiconductor Factory in Mainland China
Foxconn is expanding its Chinese production capacity to minimize its vulnerability to external disruption.
The manufacturer encountered problems assembling Apple handsets last year because the Sino-American trade war created sourcing issues. More recently, the corporation’s efforts to manufacture Nintendo’s Switch consoles have been stymied by component shortages. The firm’s new factory will allow it to contain its production and logistics resources within a single geographic region and enhance its fabrication dexterity.
The company’s decision to open a new plant in China also comes with certain economic advantages.
In recent years, the Sino government launched an initiative to bolster the nation’s domestic technological resources and production capability. As such, Beijing earmarked $118 billion to support in-country semiconductor research, development, and manufacturing capacity. As it happens, a government-sponsored organization called the Rongkong Group is co-financing the construction of Foxconn’s new facility.
Since 2018, the corporation has worked with Chinese municipal authorities to establish new plants in Zhuhai and Nanjing.
Why Foxconn Wants to Make 5G and AI Chips
As one of the world’s largest electronics manufacturers, Foxconn handles component fabrication and device assembly for Dell, Sony, and Toshiba. However, the firm’s recently announced plans to expand into digital healthcare, industrial robotics, and battery-powered vehicle manufacturing. This 5G and AI chip factory will help it pursue those ambitions.
In January, the Taiwanese multinational entered into a partnership with Socionext and Network Optix to develop new AI-powered tools. Together, the three firms are developing a series of 24-core ARM Cortex system-on-a-chip solutions that can perform next-generation customer checkout, surveillance, and quality control operations.
In addition, Foxconn recently teamed with Intel to create a fifth-generation mobile network-compatible multi-access edge computing (MEC) platform. The two corporation’s technology stack is capable of performing a range of high-performance tasks that can be customized to suit an organization’s needs. In particular, the corporations noted their 5G MEC solution could direct automated vehicle operations within a warehouse setting.
All that is to say, Foxconn’s new Qingdao factory will help it grow from a multibillion-dollar corporation to a trillion-dollar conglomerate.