Foxconn buys chip factory off Macronix in bid to break into the electric vehicle market

Electronics giant must conquer its supply chain as US eyes domestic production

Taiwanese electronics giant Foxconn has purchased a chip plant for $90.8m from its compatriot, Macronix International.

"Macronix is pleased to see the subject 6-inch wafer fab continue to make its contribution to Taiwan as Foxconn commits to have the fab be used as an important base for Foxconn to reinforce its semiconductor development plan and to meet the demand of electric vehicles," said Miin Wu, chairman and CEO of Macronix, in a canned statement on Foxconn's website.

The sales agreement includes Macronix's 6-inch wafer fab and equipment, but no employees, in Taiwan's Hsinchu Science Park and is planned to close by the end of 2021.

The facility will focus on silicon carbide semiconductors, or SiC chips, that have high-voltage resistance and good thermal dissipation, and are often used in 5G base stations and fast-charging facilities.

Foxconn has increasingly focused on the electric vehicle market as part of its "3+3" strategy, which essentially means it is chasing entry into smart healthcare, electric vehicles, and robotics with a focus on AI, semiconductors, and next-gen telecoms.

The automobile industry has been hit hardest by the ongoing semiconductor shortage as electric vehicles use more chips than traditional cars.

Foxconn has flirted with the semiconductor industry before, partnering with Softbank-owned Arm to create a chip design centre in Shenzhen, China, establishing the IC-focused "S" subgroup in 2017, and even unsuccessfully attempting to buy a chip production facility in 2019 from Fujitsu.

The fab acquisition is the boldest move yet for Foxconn's semiconductor dreams.

Though it may not be without political interest. Foxconn has more factories in China than in any other country. Twelve are in nine Chinese cities and its largest factory is in Shenzhen, which produces many Apple iPhone parts.

US sanctions on silicon manufacturers have been ongoing and damaging to China's industry.

On the same day as Foxconn's announcement, US President Joe Biden signed an executive order for efforts to make 50 per cent of all passenger vehicles sold electric by 2030.

In his speech before signing the order, he said the US had done the bulk of the research and development on EV technology but had fallen behind on profiting due to inaction.

"China moved, and China now owns the market. So we just got to get back in the game," said Biden.

He announced an infrastructure plan inclusive of 500,000 charging stations along roads and highways and in residential areas. He also detailed the Build Back Better plan, which invests in multi-generational battery and semiconductor research and development.

"Right now, China is leading the race, and is one of the largest and fastest-growing electric vehicle markets in the world. And a key part of the electric vehicle – to state the obvious – is the battery. And right now, 80 per cent of the manufacturing capacity for these batteries is done in China," said Biden.

He added: "We led in the development of this technology. And there's no reason why we can't reclaim that leadership and lead again. But we just have to move, and we have to move fast." ®