Foxconn to invest $1.5bn in chipmaker Tsinghua Unigroup

Foxconn plans to invest 9.8 billion yuan ($1.46 billion) in embattled Chinese chipmaker Tsinghua Unigroup as the world’s top contract electronics maker further advances its push into semiconductors.

Taiwan-based Foxconn, formally known as Hon Hai Precision Industry, is expected to buy into state-backed Unigroup’s new holding company through Shanghai-listed subsidiary Foxconn Industrial Internet, which produces servers and personal computers. The plan was reported by Taiwanese media Wednesday.

Unigroup has been undergoing a court-led bankruptcy reorganization since last July after a string of acquisitions left it laden with debt. Under a restructuring arrangement announced Monday, the company is now wholly owned by Beijing Zhiguangxin Holding, a vehicle formed by a consortium led by investment firms.

An investment of this size in a company based outside Taiwan will need to be reviewed by Taiwanese authorities.

FII stressed in a comment issued Wednesday that it is an “independent company listed in mainland China,” adding that it “invests in private equity funds to look for technology and targets that can contribute to our future development.” It made no mention of specific investment plans.

Thin profit margins have been an issue in recent years for Foxconn, whose core business is contract iPhone assembly for Apple. The company is scaling back its focus on its existing operations while stepping up new forays into electric vehicles and semiconductors.

Foxconn has started taking more proactive steps in this direction, such as last summer’s acquisition of a plant from Taiwanese memory chip maker Macronix International.

Semiconductors accounted for only a small fraction of Foxconn’s 5.99 trillion New Taiwan dollars ($200 billion) in revenue last year. Nikkei.Asia