Foxconn is popular for being known as Apple's main assembler when it comes to one of its most powerful devices, the iPhone. In the last few years, the Taiwanese firm has started to make moves into semiconductors, placing much investment in rising technologies.
Foxconn Is Betting on Artificial Intelligence to Boost the Demand for Semiconductors
According to the story by CNBC, the rising technologies that Foxconn bets on include artificial intelligence, which is expected to increase the demand for semiconductor chips. However, Foxconn's semiconductor foray has been difficult, with the article highlighting different issues.
The issues mentioned in the article include the difficulty for newer competitors to enter the market. This is because it is already very much dominated by firms that are already established with a lot of experience and a supply chain that is already highly intricate.
Gabriel Perez, a BMI ICT analyst, gave a statement to CNBC through an email saying that the industry imposes high entry barriers to newcomers, with high levels of capital intensity and access, which they convert into intellectual property.
Other Players Like TSMC, Samsung, and Micron are Already Well Established
According to Forbes India, this comes as players like TSMC, Samsung, or Micron, considered established entities, counting on its advantages like several decades of research and development, process engineering, and investments, worth trillions of dollars, for them to reach where they are now.
Foxconn actually has a different name and it's also known as Hon Hai Technology Group, as the company works as a contract electronics manufacturer responsible for consumer product assembly. This includes an assembly for products like the iPhone.
Recently, Foxconn has decided to expand into semiconductors, forming the Yageo Corporation joint venture in May 2021, and in the same year, the company bought a chip plant from Macronix, a Taiwanese chipmaker.
The efforts of Foxconn started to increase in 2022, when it agreed with Vedanta, an Indian metals-to-oil conglomerate, to set up a plant in India for semiconductor and display production. This would be part of its joint venture worth $19.5 billion.
Foxconn Started Increasing Its Efforts Before It Pulled Out of the $19.5 Billion Deal
The Apple supplier dropped out of its $19.5 billion India factory plan, according to BBC, which happened just a year after the company announced plans to build a facility in Gujarat, the home state of India's Prime Minister Narendra Modi.
Neil Shah, Counterpoint Research's VP of research said that Foxconn is diversifying its business by pushing into semiconductors. Shah noted that the reason for doing this is the company wanting to become what was described as a "one-stop shop" for automotive and electronics companies.
The article by CNBC notes that should Foxconn assemble electronics and manufacture chips, its business will have a very unique and competitive edge. The investment of the company comes as India is also trying to boost its domestic semiconductor industry.
Perez noted that in their decision to establish a JV in India, they need to respond to two important trends, the market's growing role regarding consumer electronics manufacturing as well as the ambitions of India.
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