There was a significant announcement from global based electronics contacts manufacturing services (CMS) provider Foxconn which we wanted to highlight to our Supply Chain Matters readers because of the industry significance.
Last week, both Reuters, The Wall Street Journal and other Asian news outlets reported that the CMS has entered into an approximately $90.8 million agreement with Taiwan based semiconductor chip producer Macronix International to assume control of a smaller scale semiconductor fabrication production facility. The facility, a 6-inch wafer fab located in Hsinchu which has previously been idle, is designed to produce automobile focused semiconductor devices made of silicon carbide.
Foxconn Chairman Liu Young-Way indicated to reporters that the facility will gear-up to produce upwards of 15,000 wafers monthly by 2024. Liu further indicated that although the plant has modest volumes the move represents a start to broader efforts in becoming “a major player for automotive chips.”
This plant acquisition to be completed by the end of this year.
In January and again in February, we called reader attention to Foxconn’s unfolding strategy to be a contract manufacturer of electric powered vehicles, primarily with services agreements with auto makers Geeley, Fisker and Stellantis.
As stated in our prior blog in February, the association of Foxconn (formerly known as Hon Hai Precision Limited) as go-to strategic contract manufacturing services provider to consumer electronics provider Apple, will continue to fuel more speculation that Apple will end up relying on its partner for its eventual rumored entry into electric vehicle design and manufacturing of Apple Car. Apple and Fisker share the Silicon Valley’s high tech industry preference for asset light infrastructure when it comes to manufacturing. Foxconn’s strategic moves also reinforce the ongoing fusion of automotive and high tech component supply networks.
For electric vehicles, another influential player to watch is that of Tesla. In its reporting of Foxconn’s latest move, The Wall Street Journal reported that the EV producer was the first to adopt silicon carbide semiconductor device design to operate EV functions and pointed out that Foxconn’s Chairmen was evasive when asked whether its entry into this area was to eventually supply some of Tesla’s needs. As readers are aware, Tesla operates its own global based production facilities.
It stands to reason why there would be a reluctance to comment on a potential Tesla supply agreement in the future, namely because the influential shadow manufacturer in the background may eventually be Apple.
Another twist to these ongoing developments remains Foxconn’s future plans for its meager U.S. manufacturing presence in Wisconsin.
When the Fisker relationship was first unveiled, Fisker’s CEO Henrik Fisker had hinted to reporters that there was a good chance that initial production of the second-generation vehicle could be at Foxconn’s Wisconsin production complex. That speculation remains on and off in automotive circles and in discussions regarding the future of Wisconsin.
EV demand and supply network capabilities are taking on more of a strategic supply chain capability agenda among certain nations particularly in China, Europe and the United States. The global automotive industry’s ongoing shortage of semiconductor devices is expected to continue into next year, and perhaps further. We speculate that domestic production presence of semiconductor devices is likely to become a focus of lawmaker as well as industry supply network discussion under the umbrella of near shoring focused supply network resiliency. Foxconn would be wise to pay particular attention to such discussions in the coming months.
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