Foxconn to Build First Chip Factory in China

Foxconn, the Taiwanese manufacturer of Apple’s iPhones as well as devices from many other companies, is planning to open its first chip plant in the Chinese city of Zhuhai, according to Nikkei sources.

Foxconn’s New Chip Plant

According to the Nikkei report, the plant will need an investment of $9 billion, but most of it will be paid by the local Zhuhai government through subsidies and tax breaks.

The report also said that the need for this plant appeared in the wake of the trade dispute between the U.S. and China, which includes concerns about China expanding its production of microchips.

Nikkei said that Foxconn would form a joint venture between Sharp, the Japanese subsidiary that Foxconn acquired in 2016, and the local Zhuhai government.

Foxconn Goes into Chip Manufacturing

Sharp is the only Foxconn subsidiary that has chip manufacturing experience. However, the company stopped developing semiconductor technology when it ran into financial problems in 2010.

Foxconn seems to aspire to enter the chip manufacturing business, but many believe it lacks the needed resources as chip plants tend to be quite expensive. Previous reports have said that TSMC, the leading third-party chip manufacturing company, is going to spend $15.7 billion on a 5nm plant and $19 billion on a 3nm plant.

A source told Reuters that Sharp itself was not involved in the talks between its new parent company Foxconn, and the Zhuhai government. Foxconn, which is formally known as Hon Hai Precision Industry Co Ltd, is planning to start construction as early as 2020.