Key iPhone assembler Hon Hai Precision Industry, also known as Foxconn Technology Group, is trying to expand its foothold in the semiconductor industry by partnering with SoftBank Group-owned ARM to create a chip design center in the southern Chinese city of Shenzhen, people familiar with the matter told the Nikkei Asian Review.

The move highlights the ongoing efforts by the world's largest contract electronics maker to build more key components and tap into new technologies for future growth faced with weakening global demand for smartphones. While Foxconn Chairman Terry Gou has set an annual sales growth target for his manufacturing empire of 10%, Hon Hai's revenue for the first nine months of 2016 dropped more than 3% year-over-year.

One nascent field Gou has enthused about is the internet of things, the technology that requires a growing number of chips to help items in daily use to connect to the internet and communicate with each other.

According to research company IC Insights, the IoT chip market will grow 19% to $18.4 billion in 2016, and will expand to $29.6 billion in 2019. Research group IDC estimates that the total IoT market will top $5 trillion in 2019.

"We want to get into semiconductor design and production," Gou told China's Shenzhen Satellite TV last week, at around the time when Foxconn signed a memorandum of understanding with the Shenzhen government to work together on semiconductor technology and startup incubators. He did not elaborate further.

Sources familiar with the plan said that Foxconn is working with ARM, the British innovator whose chip technology is adopted by 95% of smartphones worldwide, to create a chip design center in Shenzhen, without providing details.

ARM, Foxconn and SoftBank all declined to comment.

By: DocMemory
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