Foxconn negotiating purchase of Macronix semiconductor foundry to support EV business

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Foxconn Wisconsin deal is now under scrutiny.
Image: YouTube | CNBC Television

Foxconn, Apple’s primary iPhone assembler, is negotiating the purchase of a semiconductor factory owned by Macronix International. The firm wants to buy the facility to support its entry into the electric vehicle manufacturing industry. It is also interested in a SilTerra Malaysia plant for the same reason.

The Taiwanese corporation revealed its intentions to claim a 10 percent share of the EV market in March.

Foxconn Wants to Expand its Manufacturing Resources

At present, Foxconn generates the bulk of its revenue by assembling consumer electronic devices for several multinational providers. However, it has worked to expand its manufacturing resources to diversify its business for some time now.

Earlier this month, the company declared its interest in buying a 6-inch foundry Macronix maintains in Hsinchu. The facility’s primary function is to produce driver and power management ICs. Its owner announced it would put the complex up for sale last month and hopes to close a deal in the second quarter.

Foxconn is also interested in snapping up an 8-inch wafer fab owned by SilTerra Malaysia. That facility utilizes CMOS processes to fabricate analog and mixed-signal, high voltage, logic, and radio frequency components. The Taiwanese electronics firm initially expressed interest in bringing the complex under its umbrella last December.

The contract manufacturer attempted to buy a foundry owned by Fujitsu in 2019. However, United Microelectronics Corp. (UMC) ended up acquiring the plant it had its eye on. Undaunted, the corporation has spent the last few years recruiting ex-TSMC and UMC employees to bolster its chip-making capabilities.

Why Foxconn Wants Fabs That Use Older Manufacturing Technologies

Intel, TSMC, and Samsung are currently working to increase and advance their contract manufacturing resources, but Foxconn is taking a different approach.

The corporation is not looking to establish chip factories with the capability to make leading-edge products. Instead, it wants facilities that can fabricate 200nm and 300nm silicon commonly used to make automotive electronic parts. Having an ample supply of those components on hand will be crucial to its EV project succeeding.

Because of its size, Foxconn could negotiate favorable deals with various chip vendors. But its recent efforts indicate it wants to control its supply chain to win the business of leading automakers. Since the global semiconductor shortage has severely disrupted several major industries, its strategy is prudent.

In brief, the shortage began because end-market demand outstripped providers’ inventories and foundries’ production capacity. Since it began last year, the shortfall has prompted several top carmakers to ramp down their output. The electronic parts crunch has also spilled into other fields, including the consumer electronics, cryptocurrency, and renewable energy segments.

Foxconn recently warmed that its shipments could be reduced by 10 percent this year because of the shortage.

The world’s foremost semiconductor manufacturers are in the process of expanding their capacity to relieve the bottleneck. But upgrading and building foundries is a time-consuming process. Accordingly, industry leaders expect the shortfall will persist until 2022.

Foxconn is addressing the crisis by engaging in talks to buy older silicon wafer factories. Those facilities will enable the corporation to pursue its EV sector interest and protect it from future component shortages. Regardless of how things go with Macronix and SilTerra, the firm is will remain focused on realizing its automotive industry ambitions.

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