Foxconn Electronics' (Hon Hai Precision Industry) ambition in the chipmaking sector is taking shape. The Taiwan-based conglomerate reportedly has stuck a deal with China's Zhuhai government under which the company will start constructing a 12-inch wafer plant in Zhuhai, southern China with a total investment of US$9 billion.
Most of the investment would be shouldered by the Zhuhai government through subsidies and tax breaks, according to a recent Nikkei report. Construction of the new 12-inch plant in Zhuhai is expected to kick off as early as 2020.
The upcoming Foxconn 12-inch plant is designed for the fabrication of chips mainly for UHD TVs and image sensors, as well as other sensor chips for industrial and connected devices. The aim is to eventually expand the chip facility in Zhuhai to make more advanced chips for robotics and autonomous vehicles.
Foxconn has declined to comment on the report.
Speculation has already circulated in Taiwan's chipmaking industry that Foxconn is mulling constructing 12-inch fabs in a move to step into wafer fabrication. Foxconn failed in its bid to acquire Toshiba's memory chip business, but has not given up on its semiconductor ambitions.
Foxconn chairman Terry Gou was quoted in previous reports saying the group will be strengthening its deployments in the semiconductor field. Foxconn has established a subgroup to consolidate resources to grow its presence in the semiconductor field, with Young Liu, who also serves as a director of Sharp's board, leading the subgroup.
Foxconn's chipmaking related affiliates including equipment supplier Foxsemicon Integrated Technology, backend house Shunsin Technology, IC design house Fitipower Integrated Technology, and IC design services provider Socle Technology are already operated under the semiconductor subgroup. Foxconn also has subsidiary Sharp operate 8-inch fabrication lines at Fab 4.
The deal between Foxconn and the Zhuhai government is more about China's ambitions to improve self-sufficiency in the semiconductor sector, according to market watchers. With capital support from the municipal government, Foxconn will help China improve its semiconductor self-sufficiency.
Based on the "Made in China 2025" program, China's self-production rate of semiconductor products needed for the domestic market will reach 40% by 2020 and surge further to 70% by 2025, making it a crucial national policy to expand IC production capacities.
Despite financial support from the China government, Foxconn will have to deal with several challenges such as hiring talent in the establishment of its contract chipmaking business, the watchers noted.
In other news, major pure-play foundries including TSMC and UMC have seen their 12-inch fab capacity utilization rates reach lower-than-expected levels, the watchers indicated. Besides, a number of new 12-inch fabs particularly those based in China are looking to go online which will result in more 12-inch foundry supplies over the next couple of years.
Article translated by Jessie Shen
