Apple’s iPhone Supplier Foxconn Focuses on Specialty Chips, Not Cutting-Edge Technology
Foxconn, the official supplier of Apple’s iPhones, stated that its semiconductor strategy is to prioritize the production of “specialty chips” rather than competing in cutting-edge chip technology. Chiang Shang-Yi, the chief strategy officer for semiconductor at Hon Hai Technology Group, Foxconn’s official name, explained that they do not aim to compete with leading-edge players in the field of 4-nanometer or 3-nanometer chips. Instead, their focus lies in specialty technologies found in sectors like automotive and the internet of things, which typically use mature technology such as 28-nanometer or larger chips.
Specialty chips are semiconductors used in specific industries and applications. The term “nanometer” in chips refers to the size of individual transistors on a chip. Smaller transistors offer more power and efficiency, but their development is more challenging. While companies like TSMC and Samsung are sprinting towards producing advanced 2-nanometer and 3-nanometer chips, Foxconn recognizes that competing in this space would be too late for them.
Foxconn’s Expansion into Semiconductors and Electric Vehicles
Foxconn, the world’s largest contract electronics manufacturer, has recently made strides in the semiconductor and electric vehicle (EV) industries. In terms of EVs, Foxconn’s focus is on power devices and silicon carbide chips, which are increasingly preferred by EV manufacturers due to their higher efficiency at higher voltages commonly found in EVs. Foxconn introduced EV prototypes in 2021 through its venture with Taiwanese car maker Yulon Motor, called Foxtron.
Although Foxconn currently produces a small number of EVs, it aims to capture a 5% market share globally by 2025. The company recognizes that its strength lies in various aspects of the EV business, including component manufacturing, platform development, and contract, design, and manufacturing services. By attacking all these areas, Foxconn can maintain a competitive cost structure and offer products that traditional auto original equipment manufacturers tend to struggle with.
Foxconn believes in having a diversified presence across the EV industry. By participating in different aspects such as component manufacturing, platform development, and contract services, they gain a comprehensive understanding of the market and its dynamics. This approach allows them to stay informed about the latest trends and challenges, as experienced during the global chip shortage that affected the automotive industry. By having involvement in various areas, Foxconn can better manage potential disruptions and proactively address issues.
Challenges in Foxconn’s Semiconductor Venture
Entering the semiconductor industry has not been easy for Foxconn. The market is dominated by established players with extensive experience and complex supply chains. Earlier this year, Foxconn withdrew from a joint venture with Indian conglomerate Vedanta due to challenges faced in setting up a semiconductor and display production plant in India.
However, Foxconn’s CEO and chairman, Young Liu, does not consider this setback a failure. They continue to work with the government to explore opportunities and seek support for their proposals. Foxconn has been successfully cooperating with countries like India, Indonesia, and Thailand in their EV-related ventures. Their focus on the entire supply chain allows them to navigate challenges and stay ahead of market dynamics.
In conclusion, Foxconn’s semiconductor strategy revolves around specializing in specific chip technologies rather than competing in cutting-edge advancements. Their foray into the EV industry is centered on power devices and silicon carbide chips. By participating in various aspects of the EV business and maintaining a diversified presence, Foxconn aims to capture a significant market share globally. However, they face challenges in the semiconductor industry, but they remain committed to finding solutions and expanding their cooperation with different countries and companies.