Geely and Foxconn have agreed to establish a new joint venture for chip-making.
According to public information, Shandong Fujikang Intelligent Manufacturing Co., Ltd. is jointly held by Geely Industrial Investment Holdings (a subsidiary of Geely Holding) and Futaihua Industrial (a subsidiary of Foxconn), was formally established in Zibo, Shandong province on December 27.
The new company was formally established with a registered capital of 100 million yuan, and the legal representative is Li Guangyao. Geely Industrial Investment Holdings and Futaihua Industrial each hold 50% of the shares.
The business scope of Joint Venture includes the manufacturing of intelligent vehicle equipment and essential equipment, intelligent control systems, power electronic components, integrated circuit chips, and products, etc.
Back to January 13 last year, Zhejiang Geely Holding Group Co., Ltd. signed a strategic cooperation agreement with Foxconn Technology Group. Both parties announced the establishment of a joint venture company to provide OEM production and customized consulting services for global automobile and transportation companies.
The joint venture will offer several products and services, including but not limited to the entire automobile or parts, intelligent control system, automobile ecosystem, and the whole process of the whole industry chain of electric vehicles, etc.
What benefit will JV bring Foxconn？
With its foundry for Apple, Foxconn has gradually built up its advantages at the end of the supply chain. However, Foxconn wants to be more than just an assembly company for Apple and others.
The gradual deepening of the industrial chain is an essential strategy for Foxconn’s automotive manufacturing business.
What benefit will JV bring Geely?
Just as the technology giants are making cars one after another, automakers have shown more interest in chips than ever before. Geely is no exception.
Tianyancha, a Chinese data technology service company, shows that Geely Holding Group changed its business scope information last October. It added power electronic components, batteries, auto parts, integrated circuit chips, and other products.
This time’s cooperation between Geely and Foxconn has risen to the level of chip manufacturing.
Foxconn’s strategy
Foxconn is recently a lot into automotive. Last year Foxconn launched its own EV brand Foxtron and stated that its goal is to gain a 10% share of the EV market between 2025-2027. They also hired Jack Cheng – an automotive veteran and cofounder of EV startup Nio. At Chongqing Auto Conference last year, Jack explained they would offer their brand Foxtronn but also services for B2B customers. These services are called “100% “, “80% “, and “50% “.
The 100% cooperation model means that Foxconn will produce the whole car, which any EV startup can sell under its brand. The 80% model implies the customer will make their own design and car SW and Foxconn will take care of manufacturing. The 50% model means Foxconn will license and sell its MIH platform to the EV startup. “If some startup companies want to do UI and customer experience by themselves, we can just sell them the MIH platform and the body,” Cheng explained.
Let’s see if customers will accept supplier who is also their competitor. Huawei is recently dealing with the same dichotomy. We will keep an eye on that.
Early last year Geely and Foxconn agreed to jointly offer some contract manufacturing in China for Faraday Future, but nothing seems to have come of that.
Separately an offer by Foxconn to help FAW with a Byton recovery last summer was also spurned.
But in view of the latest circumstances, this chipmaking venture should be a win win for both of these companies.