Original title: Exclusive 丨 Foxconn’s car-making “trilogy”
Jiang Yue, an all-media reporter from Southern Finance and Economics, reported in Shanghai In the past two years, people have noticed the news that Foxconn has entered the car manufacturing industry, but the territory of this “mobile phone foundry” transformation is still unclear. With Foxconn’s frequent acquisitions and cooperation in the auto market, its plans are gradually becoming clearer.
On January 4, insiders of Foxconn exclusively disclosed to reporters from Southern Finance and Economics that Foxconn’s current electric vehicle business is divided into three main areas: “Android” for vehicles, third-generation semiconductors and OEM.
Song 1: “Android” for cars
Since the beginning of 2020, Foxconn announced its entry into the “car manufacturing” industry, causing an uproar in the market. How has this transformation progressed over the past two years? On January 4, Foxconn insiders introduced to Southern Finance and Economics reporters that Foxconn’s current auto business is mainly divided into three parts: “Android” for cars, third-generation semiconductors, and foundry. Among them, the first mass-produced car “Luxgen n7” equipped with Foxconn’s “Android” for cars will enter the market in the second half of 2023.
“In the first step, Foxconn and Yulon Group established a joint venture ‘Honghua Advanced’, and acquired the American start-up company Lordstown Motor to build a new car factory in Thailand.” The source said. Relevant actions have two meanings. One is to make Foxconn start to build an “open platform” for smart cars, and the other is to make Foxconn build a production line related to cars. The two will cooperate again and jointly launch benchmark models.
According to sources, Honghua Advanced is working on building an “MIH open platform”. How to understand this open platform? Liu Yangwei, chairman of Hon Hai Group, the parent company of Foxconn, once explained: “Tesla is the iPhone of electric vehicles, and Foxconn hopes to become the Android of electric vehicles.”
And what is the use of “Android” for cars? “If a start-up car factory builds a car from scratch, the input cost will be very high, but through the ‘open platform’, the cost can be reduced.” The source explained.
As for the production line factory, Lordstown Motors already has a factory in Ohio, USA. After being acquired by Foxconn, it has continued to use the existing production line to manufacture cars. In addition, in November this year, the joint venture car factory between Hon Hai and Thai Petroleum PTT Group held a groundbreaking and groundbreaking ceremony for an electric car factory in an industrial park in Chonburi, Thailand. This allowed Foxconn to acquire two electric vehicle manufacturing plants.
Foxconn’s first move to build a car is about to be verified by the market, because the company quickly launched its own “finished” complete car by using the MIH open platform and production plant. Among them, “the car brand ‘Luxgen’ under the Yulong Group, of which the n7 model car will also be mass-produced in the second half of 2023, and the current customer pre-orders have been sufficient.” A source from Foxconn exclusively told the reporter of Southern Finance and Economics disclosed.
Song 2: Third Generation Semiconductor
In the second aspect, Foxconn is entering automotive semiconductors, especially silicon carbide, known as the “third-generation semiconductor”, a new type of material that is being used in the development of power devices.
From the beginning of 2021, a “core shortage” storm swept the world, forming an “avalanche” in the field of car manufacturing on a large scale. New smart cars and electric cars are more electronic than traditional cars, and the number of semiconductor parts required in each car has increased to 1,000 or more, which has exacerbated the vulnerability of the supply chain.
The relationship between automakers and Tier 1 suppliers and chip suppliers has also undergone drastic changes due to this crisis. Right now, in order to ensure the supply of semiconductor components, automakers also have to end up personally, wading in the semiconductor field.
Foxconn, which has just entered the field of car manufacturing, also has this awareness. In August 2021, Foxconn announced the acquisition of Macronix Electronics for more than 90 million US dollars, officially entering the semiconductor industry, and laying out silicon carbide chips for vehicles.
In fact, automotive semiconductors are roughly divided into power, sensing, and cockpit, most of which are still dominated by leading companies in the semiconductor field. How do new “players” in the field of car manufacturing enter the automotive semiconductor market? Foxconn chose high-voltage and high-power devices to start. Among them, the third-generation semiconductor material silicon carbide (SiC) will improve the performance of power devices.
Foxconn sources said that because of the potential of the high-voltage and high-power attributes of the third-generation semiconductors, the current layout of silicon carbide chips for vehicles is still deepening. “Related power devices are key devices for electric vehicles. In progress.”
It is understood that Macronix has a semiconductor factory located in Hsinchu High-tech Park, Taiwan, China, which can produce silicon wafers with a diameter of 6 inches. In addition, Foxconn also acquired a 40% stake in Fast SiC to jointly develop silicon carbide MOSFETs for electric vehicles.
Song Three: OEM
In the third aspect, Foxconn will continue to expand the customer list of the foundry business. “The CDMS (Contract design and manufacturing service) model in the field of electric vehicles is Foxconn’s key work in the field of car manufacturing. The purpose is to provide vertical integration services for car manufacturing.” The above-mentioned Foxconn insider introduced to the reporter.
Why can Foxconn quickly enter the complex industry of automobile manufacturing? Judging from Foxconn’s actions, in-depth cooperation with chip companies is an important path for the company to solve the technical problems of electric vehicles.
On January 4, Hon Hai Technology Group, the parent company of Foxconn, announced a cooperation with the American chip company Nvidia to jointly develop a platform for self-driving cars. According to the information provided by Hon Hai to reporters from Southern Finance and Economics, in this cooperation, Hon Hai will play the role of a first-line manufacturer, using Nvidia’s DRIVE Orin chip to produce automotive electronic control units (ECUs), and will use this ECU and Nvidia Hyperion sensors to provide a high degree of autonomous driving capabilities for the vehicle.
This is an important step for Hon Hai to join forces with chip companies to penetrate the auto market. In recent years, chip companies have transformed from the runway of consumer electronics to take off on the new track of automotive chips. Now, the foundry Hon Hai is also trying to give itself new wings.
Sources from Foxconn told Southern Finance and All Media reporters that Foxconn entered the field of car manufacturing not with the ambition of building its own brand, but to become a “foundry” for global car companies.
In order to achieve the goal of “foundry”, Foxconn’s open platform and supply of key components have already taken the first and second steps, but customers’ “pain points” still need more solutions.
Designing and selling a car involves complex organization and orchestration. The cockpit alone has dozens of components, such as steering wheels, instrument clusters and infotainment systems, that developers need to create and integrate with the rest of the car. Automakers can use some platforms to modularly design smart functions in cars, which is why Foxconn and Nvidia have reached a cooperation.
In addition to the above three main aspects, Foxconn is also infiltrating other links in the automotive industry chain. According to market sources, the company has established a joint venture with Indika Energy to develop vehicle-mounted lithium iron phosphate batteries and produce electric vehicles, develop electric vehicle battery materials with Shuohe through equity cooperation, and cooperate with Gogoro to develop smart battery exchange systems.
Facing the future with transformation
Since its establishment in the 1970s, Foxconn has been the “world factory” in the consumer electronics industry. How did it enter the field of car manufacturing step by step?
The “car-making era” began in early 2020 when Foxconn announced it would form a joint venture with Fiat Chrysler Automobiles to develop and manufacture electric vehicles in China. On February 24, Foxconn announced the signing of a memorandum of cooperation with Fisker, an American electric vehicle company. The former will create electric vehicle products under the Fisker brand. It is expected to be mass-produced in the fourth quarter of 2023. The planned annual output will exceed 250,000 vehicles. Americas, Europe, Mainland China and India.
Then in October 2020, Foxconn and Taiwan Yulon Group jointly established “Honghua Advanced”, and established the MIH alliance with the concept of an open platform. Later, it successively established different forms of business cooperation models with Byton and Geely.
The list of auto partners or customers is getting longer and longer, and Foxconn’s series of moves has attracted market attention. Does it want to become another “Tesla”, or seek a 180-degree transformation from electronic product foundry to car manufacturing? However, the car is not in the same order of magnitude as the iPhone in terms of body size and system complexity. The above business blueprint is too risky.
In the end, Foxconn clarified to the market in person. Liu Yangwei, chairman of Hon Hai Technology Group, disclosed to the outside world that Foxconn will not produce complete vehicles in the future, nor will it build its own electric vehicle brand, but it will supply 10% of the world’s electric vehicles (about 3 million vehicles) between 2025 and 2027. vehicles) supply parts or provide services. In other words, Foxconn wants to become the foundry of the electric vehicle industry.
In the era of the rise of consumer electronics, Foxconn has taken advantage of the momentum and become a giant in the global industrial field. However, the market changes in recent years are also forcing it to transform.
Operating figures show that Foxconn’s business structure, which relies on OEM mobile phones, cannot support Foxconn’s rapid growth. As early as 2019 and 2020, the year-on-year growth rate of Hon Hai Technology Group’s annual revenue was only 0.82% and 0.3%, respectively. The reason is that most of the company’s operating income comes from 3C electronics (computers, communications, consumer electronics), which is subject to the growth “ceiling” of the 3C market.
Right now, the market is looking forward to the day when “car building” will bring revenue and profits to Foxconn.
Editor in charge: Wei Zirong
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Event Tracking
- 2023-01-05 Foxconn’s electric vehicle business layout exposure: “Android” for vehicles, third-generation semiconductors and foundry
- 2022-06-22 Foxconn considers producing electric vehicles in India
- 2021-10-20 Chairman of Foxconn: Electric vehicle factories will be built in Europe, India and the United States by 2024
- 2021-10-18 Liu Yangwei, chairman of Foxconn: the annual revenue of the electric vehicle business will reach 35 billion US dollars within 5 years
- 2021-10-14Foxconn electric vehicle will be unveiled on October 18
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