Foxconn Technology will reportedly launch an $9 billion chip-making project in China as tensions intensify between Washington and Beijing.
The Taiwan-based company, formally trading as Hon Hai Precision Industry, is set to proceed the project in the southern Chinese city of Zhuhai, nikkei.com reports. The total amount of the investment in the project could add up to around 60 billion yuan, or $9 billion.
A majority of the investment is being subsidized by the southern Chinese city of Zhuhai for what will rank as one of the country's top high-tech projects, according to the report.
The is part of Beijing's updated 'Made in China 2025' industrial policy, which aims to dominate in the field of cutting-edge technologies and has been regarded as provocative by the U.S.
Tensions between Washington and Beijing mounted further this week after the U.S. accused Chinese nationals affiliated with the government of seeking to steal sensitive technology and state information in a bid to secure economic gain. Beijing has denied the allegations.
The new facility, due to begin construction by 2020, is also expected to position Foxconn as a challenger to industry leaders such as Taiwan Semiconductor Manufacturing Co.
The plant is said to produce chipsets for ultra high-definition 8K televisions and camera image sensors, as well as various sensors chips for industrial uses and connected devices. The aim is eventually to expand the 12-inch chip facility in Zhuhai to make more advanced chips for robotics and autonomous vehicles.
Foxconn will make chips not just for its own use but for other customers, pitching it into direct competition with top players in the contract chipmaking sector, such as TSMC, U.S.-based Globalfoundries, Samsung Electronics' foundry unit, and Semiconductor Manufacturing International Co. of China.
Foxconn is expected to form a joint venture for the project with Japanese electronics group Sharp, which it acquired in 2016, and the Zhuhai government, the report adds.
For Foxconn, the chip foundry project could reduce its reliance on Apple, which accounts for half of its annual revenue, as the global smartphone market slows.
Foxconn did not respond to a request for comments.
Currently, Foxconn has a limited presence in the chip industry despite repeated efforts to expand over the years. Its four listed chip-related affiliates are relatively small compared with its flagship electronics manufacturing business. In any case, moving into chip manufacturing is very costly and requires experience.