Taiwan, China

According to relevant media reports, Taisic Materials, a subsidiary of Foxconn, successfully produced the first 8-inch SiC substrate in Taiwan, China, China. Previously, the company had only the ability to produce 6-inch SiC substrates.

Shengxin Materials, founded in 2020, is one of the few manufacturers in Taiwan, China that can produce 6-inch conductive and semi insulating SiC substrates at the same time. It has technical advantages in the field of high-quality long crystal. Shortly after its establishment, SiC crystals with a diameter of 4 inches were successfully grown, and then progressed towards 6 inches.

According to previous reports, Shengxin Materials had a monthly production capacity of approximately 400 pieces of 6-inch SiC substrates last year, and later increased the number of SiC long crystal furnaces to 65, including 5 from the United States, 10 from Japan, and the remaining 50 from cooperation with shareholder Kenmec. The monthly production capacity of 65 long crystal furnaces can reach 1200-1600 pieces.

Due to the impressive performance of Shengxin Materials in the SiC field, it has also attracted the attention of Hon Hai. Last July, in order to gain a long-term competitive advantage in the automotive semiconductor field and further ensure the supply of SiC wafers, Hon Hai Group acquired a 10% equity stake in Shengxin Materials through Hongyuan International Investment at a price of NT $100 per share, with a cumulative price of NT $500 million. Completing the investment in Shengxin Materials is an important step for Hon Hai to deepen its layout in the semiconductor and automotive fields.

01

Hon Hai has a dense layout in the SiC field

In recent years, Hon Hai has continuously expanded its presence in the semiconductor and automotive fields. In 2021, Hon Hai spent NT $2.52 billion to acquire the 6-inch wafer factory and equipment of Wang Hong located in the Hsinchu Science Park. The factory has a production capacity of 15000 6-inch wafers and is mainly used by Hon Hai to develop and produce third-generation semiconductors, especially SiC power components used in electric vehicles.

In 2021, Hon Hai and YAGEO jointly established a car semiconductor design company. We have improved the development system of the "pre process" for manufacturing semiconductor components. At the beginning of this month, both parties decided to spin off the IC and SiC component/module product lines and teams of the joint venture company, and the newly established IC design subsidiary of Hon Hai will invest NT $204 million to undertake it, further strengthening Hon Hai's territory in the SiC field.

In addition, after the sale of four packaging and testing plants in mainland China to Zhilu Capital in 2021, Foxconn purchased these four packaging and testing plants from Zhilu Capital in April this year. Some of these packaging and testing plants are used for system level packaging and electromechanical packaging, as well as for power component packaging such as third-generation SiC semiconductors and insulated gate bipolar transistors (IGBTs) for vehicles. It is reported that Hon Hai plans to provide mass production services for silicon carbide (SiC) in the second half of this year.

Last month, Hon Hai signed a memorandum of cooperation with Infineon, and the two sides will establish a long-term cooperative relationship in the field of electric vehicles, mainly focusing on the use of SiC technology in high-power applications of electric vehicles. In addition, the two sides plan to jointly establish a system application center in Taiwan, China, China, to further expand the scope of cooperation between the two sides.

02

Hon Hai Actively Transforms

Due to the poor performance of global smartphone shipments in recent years, the business of foundries has seen a visible increase in revenue without profit. According to Foxconn's latest financial report, its net profit in the first quarter of this year plummeted by 56%, marking the largest quarterly decline in three years. In addition, the company's consumer electronics business revenue in the second quarter is expected to decline year-on-year, mainly including smartphones, More than half of Foxconn's total revenue is accounted for.

Therefore, in the past few years, Foxconn has been actively trying to transform, on the one hand, advancing upstream and entering the semiconductor field. Through continuous acquisition and investment, Foxconn has continuously expanded its semiconductor territory and invited Jiang Shangyi to join. On the other hand, Hon Hai wants to find the next growth point for its contract manufacturing, and electric vehicles are its next goal after smartphones.

According to incomplete statistics, from 2020 to October 2022, Foxconn has cooperated with at least dozens of automotive industry chain enterprises. But entering the new energy vehicle market from smartphones is not a simple task. On the one hand, compared to traditional car companies like Geely, Foxconn has weak technological accumulation. On the other hand, it does not have enough influence in the face of new forces. Although it has established a certain layout in the automotive industry chain through acquisitions and investments, it still faces heavy peer competition pressure, and the first mover advantage and last mover advantage are almost invisible. Overall, Foxconn's road to car manufacturing is still long.

03

summary

Overall, after four to five years of intensive layout, Hon Hai has begun to achieve preliminary results in the fields of new energy vehicles and SiC. This time, Shengxin Materials has conquered the 8-inch SiC long crystal technology, which is also expected to accelerate Hon Hai's layout in the new energy vehicle field. However, if viewed from a global perspective, if Hon Hai wants to go further in the new energy and semiconductor fields, more efforts are needed.