TOKYO (Reuters) - Taiwan’s Foxconn (2317.TW), Apple Inc’s (AAPL.O) iPhone assembler, is in the final stages of talks with the local government of the Chinese city of Zhuhai to build a chip plant there with a total investment of about $9 billion, the Nikkei business daily reported on Friday.
The total investment could add up to around 60 billion yuan, or $9 billion, most of which would be shouldered by the Zhuhai government through subsidies and tax breaks, the Nikkei said, citing people familiar with the matter.
Zhuhai is a city in the southern Chinese province of Guangdong near to Macau.
The plans to build the cutting-edge plant comes amid the trade dispute between the U.S. and China, which includes concerns about China expanding the production of microchips.
Foxconn is expected to form a joint venture for the project with Japanese electronics group Sharp, which it acquired in 2016, and the Zhuhai government, Nikkei said, citing an industry source.
Sharp is the only Foxconn subsidiary with experience of chip manufacturing, Nikkei said. However, the Japanese company stopped developing semiconductor technology when it ran into financial problems in 2010.
A source close to the matter told Reuters that Sharp is not involved in the talks.
Foxconn, formally known as Hon Hai Precision Industry Co Ltd, is planning to start the construction as early as 2020, the report said.
Representatives of Foxconn were not immediately available for comment.
Foxconn, the world’s largest contract manufacturer, has been interested in the chip business, but many in the industry doubt the company has the resources to enter the field due to the high capital expenditures needed.
($1 = 111.2500 yen)
($1 = 6.9046 Chinese yuan renminbi)
Reporting by Makiko Yamazaki in Tokyo and Jess Macy Yu in Taipei; Editing by Himani Sarkar and Christian Schmollinger