Apple supplier Foxconn steps up semiconductor plans with deal to build a new base in Qingdao
- This marks Foxconn’s latest semiconductor project in China after other chip-related development initiatives in Nanjing, Jinan and Zhuhai
- The Qingdao semiconductor packaging and testing plant will focus on chips used on 5G and AI-based hardware products
Foxconn Technology Group, the world’s largest electronics contract manufacturer, is accelerating efforts to develop its own semiconductor supply chain in China, with a pact to build a new factory in Qingdao.
The Taipei-based company, formally known as Hon Hai Precision Industry, signed on Wednesday an agreement with the government of Qingdao, a major city in eastern Shandong province, to develop a semiconductor packaging and testing plant that it will co-finance with the state-backed Rongkong Group.
The new facility, which will start construction this year, will focus on the packaging and testing of application-specific integrated circuits used in 5G communications and artificial intelligence (AI) hardware products, according to Foxconn’s post in its official WeChat account on Thursday.
The Qingdao plant is expected to start operations next year and reach its production target by 2025, according to the company’s WeChat post, without elaborating.
Foxconn did not immediately respond to a request for comment.
The project in Qingdao represents the latest initiative by Foxconn, which is also China’s biggest private employer, to expand its operations in the world’s second largest economy, while supporting the central government’s goal to develop a leading domestic semiconductor supply chain by 2030.
Semiconductors are the cornerstone technology of the information age. These tiny electronic devices, usually smaller than a postage stamp, power the modern economy by acting as data-processing brains for a range of products, from smartphones and supercomputers to cars and spacecraft.
Foxconn’s profit down 24 per cent in last quarter of 2019 as it braces for coronavirus impact
Following the Qingdao project’s announcement, Foxconn’s Liu was quoted on Thursday by local media as saying that the company is on track with its “3+3” group development strategy. That represents its foray into the electric vehicle, digital health and robotics industries, while developing core technologies in AI, semiconductors, and 5G and future 6G mobile systems.
In the field of semiconductors, Foxconn has initially focused its attention and resources on establishing strategic factory locations across the mainland. The company, which is Apple’s primary iPhone manufacturing partner, has pursued semiconductor-related deals with other local governments in 2018, ahead of its pact with Qingdao.
China needs ‘five to 10 years’ to catch up in semiconductors
In November 2018, the company signed an agreement with the government of Nanjing, capital of the eastern coastal province of Jiangsu, for the construction of a new factory to build chip-manufacturing equipment, according the city’s website. Total investment was pegged at 2 billion yuan (US$282 million).
In October of that same year, Foxconn forged a cooperation deal with the government of Jinan, capital of Shandong province, to jointly set up a 3.7 billion yuan industrial fund. This financing facility would be used to develop the city's semiconductor sector, which will involve establishing new chip design firms in the city, according to a China Daily report.
