Foxconn plans to build a new 12-inch joint venture wafer factory in Malaysia to complete the "last piece of the puzzle" in semiconductor manufacturing

On May 18, according to Taiwan media Economic Daily, Foxconn has launched a major investment in semiconductors and will join hands with its Malaysian partner DNex to jointly build a 12-inch wafer factory in Malaysia with a monthly production capacity of 40,000 pieces, targeting 28 and 40nm mature processes. The industry estimates that the cost of building the factory will be at least NT$100 billion.

It is reported that after the completion of the factory, Foxconn Group will complete the last piece of the puzzle in its semiconductor layout and build a "new empire" from IC design to 6-inch to 12-inch wafer manufacturing, and extend to the downstream packaging and testing.

Foxconn is another major Taiwanese electronics company's recent investment in wafer fabs in Asia, following TSMC's establishment of a 12-inch plant in Kumamoto, Japan, and UMC's expansion of its 12-inch plant capacity in Singapore. All of these investments are focused on mature processes, highlighting the popularity of mature processes.

It is worth noting that Foxconn's Malaysian plant has a monthly production capacity target of 40,000 wafers, second only to TSMC's Kumamoto plant's 55,000 wafers, and larger than UMC's expansion in Singapore, highlighting Foxconn Group's ambitions in the semiconductor field.

DNex announced yesterday (17) through a press release that it will sign a memorandum of understanding (MOU) with Foxconn subsidiary BIH. The two parties will establish a joint venture to build and operate a 12-inch wafer fab in Malaysia, with a planned monthly production capacity of 40,000 wafers, targeting 28 and 40nm processes. This MOU will take effect from May 17 for a period of one year, and may be further extended if both parties agree. The two parties did not disclose the future capital of the joint venture, the amount of plant construction, and the distribution of shareholding ratios. Based on the current market conditions, the industry estimates that the amount invested in the plant construction will be at least NT$100 billion.

Foxconn Chairman Liu Yangwei pointed out that Foxconn is very interested in the layout of wafer fabs. As early as three or four years ago, it had planned to build a 12-inch factory with the goal of producing power devices, radio frequency (RF) devices, COMS image sensors (CIS) and other products.

DNex is a Malaysian listed company, mainly engaged in electronic services, system integration and other businesses. It also has oil, energy and natural gas departments. It previously teamed up with Beijing Shengshi Investment Institution to bid for and acquire the Malaysian 8-inch wafer factory SilTerra. Foxconn acquired approximately 5.03% of DNeX's shares through its subsidiary in June 2021. The two parties therefore formed an alliance and controlled approximately 60% of the shares of the Malaysian 8-inch wafer factory SilTerra through DNeX, allowing Foxconn to indirectly invest in SilTerra's 8-inch factory.

Liu Yangwei pointed out that Foxconn's semiconductor strategy will focus on mature processes and combine it with its own special processes to make it more competitive in electric vehicle chips with the same process.

Industry analysts believe that Foxconn's current semiconductor layout includes the driver IC manufacturer Tianyu at the upstream, the 6-inch factory purchased from Macronix, the 8-inch factory under Sharp, and the 8-inch factory under SilTerra at the manufacturing end, and the packaging and testing base in Shandong, China, and the packaging and testing factory Xunxin-KY and other companies. The only thing missing is 12-inch wafer manufacturing. Now, Foxconn will build a 12-inch factory in Malaysia in a joint venture with DNex to make up for the 12-inch wafer manufacturing puzzle that Foxconn Group originally lacked in the semiconductor business.