Foxconn Technology Group and Yageo Corporation announced they recently forged a “strategic alliance” to develop new electronic components. The two Taiwanese firms also intend to work with their existing customers to hone their design and production processes. Foxconn CEO Young Liu said the new collaboration would enable both companies to acquire new customers.
Given the state of the global semiconductor industry, the Foxconn-Yageo partnership is a smart move for both corporations.
Foxconn-Yageo Alliance Details
In a press release, Foxconn and Yageo explained that their alliance is not a traditional corporate partnership.
The two large corporations will pool their respective research and development resources to create an array of new products. They are also working to fully integrate Yageo’s high-end portfolio with Foxconn’s manufacturing capacity. That means the products of the collaboration should be very technologically sophisticated and come to market fairly quickly.
SemiMarket reports the partnership also includes specific pricing and delivery guarantees from Yageo’s and priority product manufacturing assurances from Foxconn.
The strategic alliance also furthers Foxconn’s long-term “3+3” business development strategy.
The plan calls for the manufacturer to develop new artificial intelligence, semiconductor packaging, and 5G technologies. It also includes an increased focus on capturing electric vehicles, digital healthcare, and robotics sector market share. The firm launched the initiative to improve its gross margin from 6 percent in 2020 to 10 percent by 2025.
Yageo Chairman Pierre Chen said his corporation would use its vast knowledge base to help Foxconn meet its objectives.
The collaborative project will officially commence sometime in the third quarter of this year.
The Right Move at the Right Time
Right now, the global electronic components industry is in a state of flux. The U.S.-China trade war and the coronavirus pandemic have introduced massive disruption to the sector. In addition, various nation-states are now investing heavily in their domestic semiconductor industries to build up their digital economies.
Amid sector-wide instability, Foxconn and Yageo’s decision to team up is the right move at the right time.
Since both firms are based in Taiwan, their partnership will not be affected by the Sino-American trade conflict. Sharing a regional base will also protect their new R&D pipeline if another wave of coronavirus infections hits the world.
If the two tech giants decide to open any shared facilities, they could take advantage of Taiwan’s $334 million semiconductor industry subsidy program.
Because of the sizable technological resources, Foxconn and Yageo’s partnership could produce some industry-shaking innovations. Other large electronic components companies might seek to replicate their success with team-ups of their own if that happens.