Why Foxconn-TSMC Partnership is Unlikely
When it comes to the Indian semiconductor space, Foxconn has grabbed more headlines than any other player in the past year or so — but mostly for the wrong reasons. When Vedanta and Foxconn announced their joint venture last year, many perceived it as the point that kickstarted India’s semiconductor manufacturing ambitions. Now, since that plan went kaput, it’s now being speculated that Foxconn may partner-up with the Taiwan Semiconductor Manufacturing Company Limited (TSMC) and Japan’s TMH Group to keep its ambitions of building chips in India alive. Why is TSMC an unlikely partner? Today, TSMC is one of the largest chip foundries in the world catering to the likes of Apple, NVIDIA, Google and AMD, among others. Headquartered in Hsinchu, Taiwan, TSMC was the first foundry to market 7 nm and 5 nm chips and is currently working on the 3 nm and 2 nm ones. Considering TSMC’s prominent position in the semiconductor industry, this news has led to a sense of optimism and hope among many Indians. However, Arun Mampazhy, semiconductor analyst, is a bit sceptical. He believes, TSMC was hesitant about moving outside Taiwan. “It’s only because of geopolitical factors and the US agreeing to protect Taiwan that TSMC has agreed to set shop there,” Mampazhy told AIM. Besides, TSMC is also setting up fabs in Japan and Europe. In Japan, TSMC aims to manufacture 5 nm and 10 nm chips from the second half of the decade. Similarly, in Europe, TSMC is in talks with Germany, to set up a fab in Saxony. Mampazhy believes that establishing fabs in Germany and Japan would be a logical move for TSMC. For instance, in Japan, Sony and Denso serve as partners to TSMC and contribute significantly to its business, thereby providing an advantage for TSMC by setting up a fab in Japan. However, Foxconn does not bring similar benefits to TMSC in India. “Given Foxconn is only an assembler, it is unlikely that TSMC will agree to do a technology transfer or share that technology with Foxconn,” Mampazhy said. The only way he sees a potential partnership with TSMC is if Foxconn assumes the responsibility for the financial aspects of establishing a fab in India. “However, even with such support, TSMC faces considerable challenges in managing the workforce required for its upcoming fabs in Japan, the US, and Germany.” Is the trust in Foxconn waning? Foxconn tryst with semiconductors isn’t new. Back in 2018, the Taiwanese electronics contract manufacturer had announced plans to establish chip manufacturing facilities in China, but no tangible progress was made on that front. Similarly in India, their joint venture with Vedanta, which was intended to initiate their foray into chip production, too failed to materialise. “Foxconn has a history of promising and not delivering in multiple places. Wisconsin is one, then, there have been other instances of engaging with the Saudi Arabian government, Malaysia, and possibly even Mexico. In about five or six countries, Foxconn has been known to fall short on fulfilling its commitments,” Mampazhy said. In fact, Foxconn has already been part of many controversies in India. Last year, the contract manufacturer found itself embroiled in one when both Telangana and Karnataka governments simultaneously claimed Foxconn to have signed up for big investments in their respective states to manufacture electronics. In a manner reminiscent of their past experiences, a similar situation unfolded in Foxconn’s foundry plans. Their proposed joint venture with Vedanta, which was well-advanced in talks for a site in Maharashtra, abruptly shifted to Gujarat just before the state elections. “Foxconn has the reputation for being one of the most opaque companies in an opaque world,” Lawrence Tabak, the author of Foxconned: Imaginary Jobs, Bulldozed Homes, and the Sacking of Local Government, said.  According to him, Foxconn had no problem in making big announcements for the cause of a government’s electoral ambitions without having any concrete plan of action. Hence, given Foxconn’s dubious reputation, the TSMC news could also be smoke and mirrors. Taiwan’s interest in India The possibility of the two Taiwanese companies collaborating to establish a fab in India, however, remains to be seen. It is worth noting that the Taiwanese government has exhibited keen interest in India over time. Baushuan Ger, Taiwan’s ambassador to India, earlier said that both nations should sign the free-trade agreement (FTA) at the earliest. Ger said Taiwan is willing to share its expertise with India in critical sectors such as semiconductors, 5G, information security, and AI. Most recently, Taiwanese foreign minister Jaushieh Joseph Wu also sparked discussions around a FTA with India. While interacting with the press in Taipei, Wu said that Taiwan has been actively encouraging its companies, which no longer find the Chinese market profitable, to relocate their production facilities to India. Given, Taiwan alone accounts for about 60% of the total global foundry market, India stands to greatly benefit from such a deal. However, despite keen interest from Taiwan for a FTA with India, nothing has materialised so far.
It’s being speculated that Foxconn may partner-up with TSMC and Japan’s TMH Group to keep its ambitions of building chips in India alive
It's being speculated that Foxconn may partner-up with TSMC or Japan’s TMH Group to keep its ambitions of building chips in India alive
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I have a keen interest in creative writing and artificial intelligence. As a journalist, I deep dive into the world of technology and analyse how it’s restructuring business models and reshaping society.