Despite Trade War, $9bn China Chip Project Planned By Foxconn Nikkei

In the backdrop of the trade war between the United States and China partly because of Washington’s concerns of Beijing’s policies to satisfy its ambition to become a tech giant, about $9 billion would be invested by the largest iPhone assembler Foxconn Technology to finance a chip-making project in China.

With the official name of Hon Hai Precision Industry, the Taiwan-based company plans to construct the new facility in the southern Chinese city of Zhuhai. 60 billion yuan, or $9 billion is the estimated total investments for the project.

According to media reports, this project after completion would be ranked as one of the most high tech projects of China and a large chunk of the investment for the project would be subsidized by the southern Chinese city of Zhuhai.

China is on the verge of carrying out a review of its Made in China 2025 industrial policy which was framed to acquire and dominate in the area of cutting-edge technologies and one that the US considers to be provocative. However China continues ahead with its ambition to develop a self-sufficient, advanced chip industry which would run and power the high tech technologies and ambitions of the country.

It is expected that construction work in the project would begin in 2020 and following its completion, Focxconn would be able to give tough competition to leaders in the chip industry such as Taiwan Semiconductor Manufacturing Co.

In recent quarters, there has been a slowdown in the global smartphone market and which has reduced orders from Foxconn’s main client Apple Inc. This project is also seen by analysts as an effort by the Taiwanese company to reduce it dependency on the US tech giant Apple because almost half of the total annual revenues of NT$4.7 trillion ($152.65 billion) of the company in 2017 was accounted from by orders from Apple.

According to a report in Nikkei, the chips that would be the manufactured at the new proposed facility in China would be suitable to be used for the ultra high-definition 8K televisions and camera image sensors in addition to being usable in sensors chips for industrial uses and connected devices. The ultimate aim of the company is to finally expand the factory in Zhuhai into one that would be able to make more advanced chips which could be used in more advanced technologies associated with robotics and autonomous vehicles.

According to industry sources, the total investment budget for the new facility would be made in stages. However the report also warned that political issues could delay or even change the Zhuhai chip project.

Contract chipmaking companies u\such as TSMC, U.S.-based Globalfoundries, Samsung Electronics’ foundry unit, and Semiconductor Manufacturing International Co. of China, would become direct competitors of Foxconn because the new facility would not only be used by the company to make chips for its own usage but also for other users.

The report also suggested that Japanese electronics group Sharp would be a partner of Foxconn in the Chinese project. Sharp was acquired by Foxconn in 2016. Sources has also said that the Zhuhai government would also be a partner in the project. Sharp has possibly been included in the project because it is the only Foxconn company that has some experience in chip manufacturing. But manufacturing and developing of semiconductor technology was stopped in by the company in 2010 because of financial issues.

(Adapted form AsiaNikkei.com)

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Categories: Economy & Finance, Entrepreneurship, Geopolitics, Strategy, Sustainability

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