Industry News

According to reports, Hon Hai Group has launched a major semiconductor investment, partnering with Malaysian partner DNex to jointly build a 12-inch wafer fab with a monthly capacity of 40,000 wafers, targeting mature 28- and 40nm processes. Industry estimates suggest the fab construction cost starts at at least 100 billion yuan.

Upon completion, Hon Hai Group will fill the final piece of the semiconductor puzzle, building a new empire from IC design to 6-inch to 12-inch wafer manufacturing, extending to the downstream packaging and testing sector.

Following TSMC's 12-inch fab in Kumamoto, Japan and UMC's expansion of 12-inch fab capacity in Singapore, Hon Hai has recently made another major investment by a Taiwanese electronics industry leader in Asian wafer fabs, all targeting mature processes, highlighting the booming mature process market.

Notably, Hon Hai's Malaysia plant has a monthly capacity target of 40,000 wafers, second only to TSMC's Kumamoto plant at 55,000 wafers, and larger than UMC's Singapore expansion, highlighting Hon Hai's ambitions in the semiconductor field.

DNex announced through a press release yesterday (17th) that it will sign a memorandum of understanding (MOU) with Hon Hai's subsidiary BIH. The two parties will establish a joint venture to build and operate a 12-inch wafer fab in Malaysia, with a planned monthly capacity of 40,000 wafers, targeting 28- and 40-nanometer processes. This MOU will take effect on May 17 for one year, and may be further extended if both parties agree. The two parties have not disclosed the future joint venture's capital, factory construction amount, or shareholding distribution. Industry estimates based on current market conditions estimate that the amount invested in building the factory starts at at least 100 billion yuan.

Foxconn Chairman Liu Yangwei pointed out that the company is very interested in wafer fab layout, having planned a 12-inch fab three or four years ago, aiming to produce power components, radio frequency (RF) components, and COMS image sensors (CIS).

DNex is a publicly listed Malaysian company mainly engaged in electronic services and system integration, with additional oil, energy, and natural gas divisions. Previously, it partnered with Beijing Shengshi Investment Institution to bid for and acquire Malaysia's 8-inch wafer fab SilTerra. In June 2021, Hon Hai acquired about 5.03% of DNeX's equity through its subsidiary, forming an alliance and acquiring about 60% of Malaysia's 8-inch wafer fab SilTerra through DNeX, allowing Hon Hai to indirectly invest in SilTerra's 8-inch fab.

Liu Yangwei pointed out that Hon Hai's semiconductor strategy will focus on mature processes, combined with its own special processes. With the same process, it can be more competitive in electric vehicle chips.

Industry analysts analyze that Hon Hai's semiconductor layout currently ranges from controlling the upstream driver IC manufacturer Tianyu, to manufacturing with 6-inch fabs purchased from Macronix, investments in Sharp's 8-inch fabs, and SilTerra 8-inch fabs, to downstream packaging and testing bases in Shandong, mainland China, and investments in packaging and testing companies like Xunxin-KY, with only a lack of 12-inch wafer manufacturing. Now, it plans to jointly build a 12-inch wafer fab with DNex in Malaysia, filling the gap that Hon Hai Group previously lacked in semiconductor manufacturing.

Foxconn will build a wafer fab in India

According to Nikkei, major iPhone assembler Foxconn announced on Monday that it plans to establish a chip factory in a joint venture with Indian natural resource group Vedanta, making the Taiwanese company the first major foreign tech manufacturer to respond to the South Asian country's call to shift chip production to the domestic market.

The iPhone assembler said the two companies have agreed to establish a joint venture for the project, with Foxconn investing $118.7 million and holding a 40% stake. Vedanta Chairman Anil Agarwal will serve as chairman of the joint venture, which aims to meet the enormous demand from the local electronics industry.

Vedanta is India's largest aluminum producer, a leading supplier of oil and gas, and also has an interest in the telecommunications sector.

In a statement, Foxconn said: "The first joint venture between the two companies will support Indian Prime Minister Narendra Modi's vision to create a semiconductor manufacturing ecosystem in India." ”

The company is also among the first major tech manufacturers to support Modi's "Make in India" initiative to promote domestic manufacturing, and has established multiple production centers in the country.

However, according to someone familiar with Foxconn's plans, progress in chip projects will also depend on subsidies from India's central and state governments as well as bank loans.

After an unprecedented global chip shortage hit numerous industries, from smartphones to personal computers to automobiles, India has joined a series of countries lobbying to build and strengthen its own chip supply chain. India has approved incentives worth 760 billion rupees (9.94 billion USD) to stimulate local semiconductor and display panel manufacturing. The EU and the US have each launched similar support programs, with the European Commission recently announcing a €43 billion ($4.86 billion) plan to develop its chip supply chain.

Taiwan has the world's second-largest chip industry after the United States, controlling the majority of advanced chip manufacturing and having established a complete chip supply chain on Taiwan's west coast for decades. However, there is growing concern that advanced chip production will be concentrated on this island.

Although Foxconn is widely regarded as the main assembler of the iPhone, it has long dreamed of building its own semiconductor production capacity. Its main subsidiaries, Foxsemicon and Marketech International Corp., manufacture chip equipment components and provide chip facility construction services. It also has an internal semiconductor business unit, offering a variety of chip design solutions.

The Foxconn chairman identified chip development as one of the foundations for the company's drive to drive electric vehicles. Last year, the company acquired the chip factory of Taiwanese chip manufacturer Macronix in Hsinchu, a northern Taiwanese city, to develop silicon carbide chips for automobiles.

It also acquired a 5% stake in Dagang NeXchange Berhad (DNex), the parent company of Malaysian chipmaker Silterra, securing a seat on Foxconn's DNex board. According to an earlier report by Nikkei Asia, to strengthen its capabilities in this field, Foxconn has been recruiting engineers from TSMC and UMC in recent years.