Foxconn, Yageo form semiconductor joint venture XSemi
Foxconn, the world’s leading assembler of electronic equipment and Yageo, the world’s third largest manufacturer of passive components since its acquisition of Kemet, said they want to extend their businesses into the semiconductor industry to help address such markets as electric vehicles, robotics and health electronics.
However, the proportions of the joint venture to be held by each parent were not disclosed. It also remains unclear whether the duo intend for the joint venture to be fabless or to eventually receive the capital investment to allow it to manufacture analog, mixed-signal and power chips.
Foxconn said the joint venture will focus on developing semiconductor chips with average selling prices (ASP) below US$2.00 and that it has started discussions on collaboration with several global chip companies.
It is likely that XSemi is being lined up to provide chips for the automotive, healthcare and robotics sector where ‘small chips’ can make up 90 percent of the semiconductor bill of materials. This would put XSemi in a similar place to a company such as Nexperia, now owned by Wingtech Technologies Co. Ltd., which happens to be a Chinese contract manufacturer (see China-owned Nexperia refinanced with $1.5 billion).
Foxconn has been signalling its intention to enter the semiconductor sector since 2018 and has made a couple of unsuccessful approaches to established semiconductor operations (see Foxconn bids for stake in Malaysian foundry and Foxconn plans to be a chip company).
Next: Teaming up
After missing out on a couple of bids to buy out portions of other chip businesses Foxconn formed a strategic alliance with Yageo to combine R&D in September 2020.
XSemi will be headquartered in Hsinchu, Taiwan and will work with semiconductor companies in product design, manufacturing processes, capacity planning and provide a sales channel. Foxconn said the intention is to create a “complete semiconductor supply chain.”
Young Liu, chairman of Hon Hai, said in a statement that the semiconductor industry is about to go through its biggest restructuring for three decades and that this was therefore a good time to enter the sector. XSemi’s key product focus, small ICs, will become the most important element of Hon Hai’s future plan.
Foxconn said it already has capabilities in semiconductor manufacturing equipment; product design services; IC design in 5G, AI, CMOS image sensors and display drivers; access to foundries and advanced IC packaging.
After the acquisition of Kemet and Pulse, Yageo has put an emphasis on high-end product development to consolidate technologies and channels to be close to its customers.
In the same statement Pierre Chen, chairman of Yageo, said: “Yageo aims to create a one-stop shop for its customers, and through this joint venture, we will further provide the services and products that meet customers’ needs for supply chain optimization.”
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