Apple Assembler Foxconn Pushes Further Into EVs With M&A

Consumer electronics assembly giant Foxconn has acquired and merged a pair of component firms to boost the Taiwan-based company’s position in the competitive electric vehicle market.

Foxconn announced last week that it had acquired the wireless telecommunications business of Taiwanese fabless component supplier Arqana Technologies and merged with California-based integrated circuit design house AchernarTek for an undisclosed amount. Both moves will help Foxconn, founded by Taiwanese billionaire Terry Gou, and its customers develop semiconductors for the automotive sector and 5G infrastructure, Foxconn said.

AchernarTek and Arqana’s Taiwan and Belgium units will combine, under the name iCana. “Under the Foxconn umbrella, iCana can share Foxconn’s new expertise and novel solutions, which will enable iCana to meet the growing market demand of 5G connected electric vehicles,” Foxconn said.

The newly formed unit will “create new products and penetrate new markets” for semiconductors in multiple industries, “starting with semiconductor components for electric vehicles,” iCana CEO Glenn Vandevoorde said in the statement.

The global EV market is expected to reach $1.3 trillion by 2028 at a compound annual growth rate of 24%, Fortune Business Insights forecasts. The automotive semiconductor market is estimated to grow from $35 billion in 2020 to $68 billion in 2026, Taipei-based Market Intelligence & Consulting Institute says.

Since automotive production restarted around the world in late 2020, after the first wave of the pandemic, the crush to get automotive chips has grown and remains strong because of “pent-up consumer demand” for EVs and hybrids, Moody’s Investors Service said in a commentary note.

Foxconn as a “latecomer” to EV technologies is using mergers, acquisitions and cooperation with third parties to get ahead, says Brady Wang, Taipei-based associate director with market research firm Counterpoint Research. “Its way of doing things is positive and has potential,” Wang adds.

The Taiwanese assembler best known for making iPhones and iPads for Apple at its factories in China has been shifting toward EVs over the past year. In 2021, Foxconn reached deals with Los Angeles-based startup Fisker and global auto-making giant Stellantis to make electric cars in the U.S. and co-develop automotive chips, respectively.

In China, the world’s biggest EV market, Foxconn is working with domestic car maker Zhejiang Geely Holding Group. Foxconn has invested in Taiwanese electric scooter developer Gogoro over the past year to help its push into EVs.

Foxconn has the advantage of flexibility, Wang notes. Its production lines switched quickly in 2020 to make ventilators for hospitals during the first wave of Covid-19, for example.

“When compared with other electronic component manufacturers, Foxconn’s advantages lie in its ability as a conglomerate, which possesses mass production, contract manufacturing and modularization capabilities and has massive resources in capital and manpower,” said Tu Chia-wei, an industry analyst with the Market Intelligence & Consulting Institute in Taipei.