Foxconn, the tycoon of OEM for electrionics worldwide, their rise story about how they grew to be the “Foxconn Empire”, were always the benchmark of the Economic Miracle of Taiwanese SMEs. Since they started to join the supply chain of automotive electronics , Foxconn has been involved in automotive industry for 16 years. As BEVs become a rising trend, Foxconn’s CEO Terry Kuo clearly announced the group strategy to fully dedicate the resources to the new automotive technologies in 2014. In other words, Foxconn showed its ambition to entering automotive industry exactly 7 years ago.
Foxconn set a very high target to take 10% market share of global BEV sales between 2025 and 2027 on HHTD21 last October, as gross margin for the whole group should increase to 10% by new business expansion (currently is 5%). What did Foxconn do in the last 7 years to make them so confident ? Now let’s review their strategy planning from every aspect…
-Organization structure completed. Foxconn merged Haitec from Yulon Motor Co., and established the automotive technology center called Foxtron. In addition, Foxconn also build the MIH EV platform to execute the vertical integration and horizontal division of labor for supply chain, and also the coordination for OEM of vehicles assembly operation. Until now MIH platform have assembled over 2,000 companies, including quite a few world-class tech. giants. Foxconn then planned to establish a software R&D center with 1,500 employees in the next 3 years, to transform themselves into a company that take “soft power” as their core competitiveness.
- The acceleration of “estuary” expansion. The so-called “estuary” for Foxconn means the carmakers that will utilize MIH platform… So far we already know that besides Luxgen, there are 14 brands from Stellantis group, which was just established early last year (50:50 joint-venture to found the company “Mobile Drive” that will develop smart cockpit), joint-venture with Geely to found “Fujiang Intelligent Manufacturing” two weeks ago, preparing to procure the assembly plant in Ohio, USA from the BEV startup Lordstown and planning for mass-production of OEM vehicles, collaborating with another startup Fisker for the Project PEAR and highly possible to produce OEM vehicles in the same Ohio plant, establishing open platform with PTT PCL ( from Thailand ) for BEVs manufacturing six months ago, joint-venture to develop new car model with Velocity, which was owned by PIF fund from Saudi Arabia (utilize BMW’s chassis, and plan to build factories across USA, China, Mexico, Thailand and other countries).
Even though these bold moves are supposed to be planned quite a long time ago, but when all happened consecutively in 2021, these just show their strong ambition, and the efficiency of Foxconn and its partners is really mind-blowing.
- The material sourcing and technology for batteries. Foxconn formed “The National Team for Batteries” in the R&D of batteries for BEVs, including the cooperation with listed companies that product positive/negative electrodes and electrolyte, and focused on the R&D of LFPs, which has lower cost and longer lifetime. In addition, Foxconn is also collaborating with CATL, the largest manufacturer of lithium-ion batteries, and SES, the startup from USA, to develop solid-state batteries, and claimed to commercialize in 2024. If that really happens, then this project will seize tremendous business opportunity in the lead.
- The foundamental engineering for autonomous driving technology. Foxconn chose to cooperate with Tier IV, the Japanese startup of autonomous driving technology. The autonomous driving system Autoware, lead by Tier iV, is the world’s first open source autonomus driving software. Even though the global technology competition status is not clear yet, but Tier IV is not ready to compete with the leaders from USA or China for now. Despite this, at least Foxconn has started their action, to prioritize autonomous driving behind EV technology, which can play safe.In addition, Foxconn invested in an autonomous driving startup named Autocore.ai in China last year, which is worthy of attention.
- Chip self-sufficiency . Foxconn procured the 6-inch FAB from Macronix 5 months ago planning to self-supply chips for 30,000 BEVs annual needs by 2024. Foxconn also reinvest in a FAB in Malaysia via Sharp. However, these supply chain actions still couldn’t meet the requirement of 10% global market share of BEVs by 2025, not to mention fulfill the massive demand for autonomous driving in the next step. Having said that, I believe Foxconn must have more plans to expand the chip production capacity continuously. In addition, the cooperation with Stellantis includes the R&D for STLA Brain chips, and also the cooperation with Geely. All these cooperations can ensure high-efficiency one-stop operation from R&D to production.
- Competition for AI computing power. In Foxconn’s supply chain cooperation partners, I assume Qualcomm is the most crucial one. From my aspect, by collaborating with Qualcomm, Foxconn’s ambition is hoping they could cooperate with Qualcomm in smart cockpit development one day. The computing power of Snapdragon Ride is up to 700 TOPS now. Even though it’s not as powerful as Nvidia’s product, but as Foxconn and Qualcomm could find business opportunities together to complement each other, that will be a strong support for their automotive business deployment.
-The enhancement for the ability of software system design. MIH platform not only teams up with ARM, the renowned IC design company, to provide complete software architecture, but also teams up with Microsoft to utilize the powerful cloud computing technology from their Microsoft Azure to build the R&D ecosystem for applications on the platform.