Apple iPhone provider Foxconn, formally often called Hon Hai, mentioned its semiconductor technique is to give attention to producing “specialty chips” — not competing in cutting-edge chips.

“We don’t chase [after] probably the most superior expertise. Hon Hai is not going to compete with vanguard gamers like 4-nanometer or 3-nanometer. We focus extra on specialty expertise,” Chiang Shang-Yi, chief technique officer for semiconductor at Hon Hai Know-how Group, advised CNBC’s Emily Tan on Tuesday.

Specialty chips are often called semiconductors present in sectors comparable to automotive and web of issues. Chips for automotive makes use of are sometimes made utilizing mature expertise – 28-nanometer or bigger chips.

“Nanometer” in chips refers back to the dimension of particular person transistors on a chip. The smaller the scale of the transistor, the extra highly effective and environment friendly it’s, but it surely additionally turns into more difficult to develop.

The likes of Taiwan’s TSMC and South Korea’s Samsung are sprinting towards producing the extremely superior 2-nanometer and 3-nanometer chips. Samsung has already mentioned it should mass-produce 2-nanometer chips by 2025, after the corporate began producing 3-nanometer chips in June final 12 months.

“If we tried to chase 3-nanometer, 2-nanometer, we’re means too late. The best way we’re engaged on [is to] simply attempt to handle the availability chain. And we name it specialty expertise – that’s not late in any respect,” mentioned Chiang.

Hon Hai Know-how Group is the world’s largest contract electronics producer that assembles client merchandise like Apple’s iPhones. However within the final couple of years, the Taiwanese agency has made its foray into semiconductors and electrical autos.

Relating to EVs, Chiang mentioned the main target lies in energy gadgets and silicon carbide chips — more and more a cloth of alternative amongst EV-makers, due to its greater effectivity at greater voltages widespread in EVs.

Foxconn first introduced EV prototypes in 2021 made by Foxtron, a enterprise between Foxconn and Taiwanese automobile maker Yulon Motor.

Foxconn at present solely produces a small variety of EVs, however has set an preliminary goal of capturing a 5% market share globally by 2025, in line with Reuters.

“After we [talk] about EV enterprise, we’ve a part enterprise. Now we have a platform enterprise. Now we have a CDM enterprise: contract, design and manufacturing providers,” mentioned Jun Seki, Hon Hai’s chief technique officer for EVs, advised CNBC in a separate interview.

“Our technique is we assault all. Element module platform makes our price very aggressive. That is an space that makes conventional auto OEMs profitability very poor, he mentioned referring to authentic tools producer, that are merchandise offered to different firms as parts.

“Typically we could should construct their vehicles by their drawings. If our prospects may give an opportunity to us, we are able to construct our concepts into their vehicles, then we are able to make prospects extra aggressive,” mentioned Jun.

Nevertheless, the worldwide EV market is simply getting extra aggressive.

China, Europe and the U.S. are main gamers in the case of electrical vehicles. From third-quarter 2021 to second-quarter this 12 months, the highest three gamers – Tesla, BYD and Volkswagen – held 42% of the worldwide EV market, in line with Counterpoint Analysis.

Foxconn’s foray into semiconductor has had a tricky begin, pointing to the issue for brand new gamers to enter a market dominated by companies with intensive expertise and a extremely intricate provide chain.

Earlier this 12 months, Foxconn pulled out of a three way partnership with Indian metals-to-oil conglomerate Vedanta to arrange a semiconductor and show manufacturing plant in India as a part of a $19.5 billion deal.

“You name it a failure, however I do not assume it is finalized but. I believe we learnt by means of the best way how we interpret, how we work with the federal government. Thus far, the federal government remains to be not making a call but. So I can’t name it a failure at this second. We’re all nonetheless attempting to work with the federal government, to search out methods so the federal government will assist our proposal,” Younger Liu, Hon Hai’s CEO and chairman, advised CNBC.

In August, the federal government of the state of Karnataka in India mentioned Foxconn will pump in additional than $600 million to construct a cellphone manufacturing challenge and a separate semiconductor tools facility.

India might account for 20% to 30% of Hon Hai’s manufacturing, which is “similar to China,” Liu mentioned.

This comes as Foxconn began diversifying manufacturing away from China. The U.S. has tightened export restrictions on chip and chipmaking tools, aimed toward limiting Beijing’s entry to superior chip expertise.

“We have been working with international locations like India, Indonesia and Thailand. They’re all going fairly nicely,” the CEO mentioned. Foxconn is exploring cooperation with Indonesia and Thailand EV-related firms.

He added that Hon Hai “very a lot give attention to the whole provide chain,” he added. “There is a good purpose for that.”

“If you perform a little bit in every little thing, you recognize what is going on on in that space. Like everyone knows, two years in the past, there is a huge scarcity in chips and lots of vehicles can’t be shipped as a result of they lack chips. And this case, Hon Hai can have a greater concept as a result of we’ll know what is going on on. And we give us extra lead time to attempt to handle them,” mentioned Chiang.