BERLIN, March 17 (Reuters) – Volkswagen (VOWG_p.DE) plans to invest in mines to bring down the cost of battery cells, meet half of its own demand and sell to third-party customers, the carmaker’s board member in charge of technology said.
Europe’s biggest carmaker wants its battery unit PowerCo to become a global battery supplier, not just produce for Volkswagen’s own needs, Thomas Schmall told Reuters in an interview.
PowerCo will start by delivering cells to Ford (F.N) for the 1.2 million vehicles the U.S. carmaker is building in Europe on Volkswagen’s electric MEB platform, he said.
Long-term, Volkswagen plans to build enough cells to meet half its global battery needs, with most production capacity located in Europe and North America, according to Schmall.
“The bottleneck for raw materials is mining capacity – that’s why we need to invest in mines directly,” he said.
The carmaker was partnering on supply deals with mining companies in Canada, where it will build its first North American battery plant.
Schmall declined to comment on further locations under consideration or where or when Volkswagen might invest directly in mines, saying the company would not disclose that information until the market was more settled.
“In future, there will be a select number of battery standards. Through our large volume and third-party sales business, we want to be one of those standards,” he said.
AMBITIOUS ROADMAP
Making or sourcing batteries at a reasonable cost is a key challenge for carmakers like Volkswagen, Tesla (TSLA.O) and Stellantis (STLAM.MI) as they seek to make electric vehicles (EVs) affordable.
Only Tesla has pledged more investment into battery production than Volkswagen, according to a Reuters analysis – though even the U.S. EV maker is struggling to ramp up production and is recruiting Asian suppliers to help.
Few carmakers have disclosed direct stakes in mines, but many have struck deals with producers to source materials like lithium, nickel and cobalt and pass them onto their battery suppliers.
PowerCo, set up last year, is targeting 20 billion euros ($21.22 billion) in annual sales by 2030.
It’s an ambitious roadmap for a unit not yet producing at scale. Production will start in 2025 at PowerCo’s plant in Salzgitter, Germany, 2026 in Valencia, Spain and 2027 in Ontario, Canada.
Still, Schmall is confident the carmaker can expand quickly – and must do so if it wants to build an affordable EV, in which 40% of the costs come from the battery.
Volkswagen released on Thursday the details of a 25,000-euro EV it aims to sell in Europe from 2025.
China’s BYD, which also produces batteries, is far ahead of Volkswagen in the affordable EV race and outsold the German carmaker for the second time in four months in China in February.
REDUCING COSTS
In Volkswagen’s 180-billion-euro five year spending plan, up to 15 billion is earmarked for its three announced battery plants and some raw material sourcing.
The carmaker has so far nailed down raw material supply until 2026 – by which time the German and Spanish plants will be in operation – and will decide in the next few months how to meet its demand from then on, Schmall said in the interview.
It has also ordered some $14 billion in batteries from Northvolt’s Swedish plant.
“Bringing down battery costs further is a challenge,” Schmall said. “We’re using all the instruments with PowerCo.”
Asian producers like CATL, LG Chem and Samsung SDI dominate global cell production, with almost half of planned battery cell capacity in Europe by Asian players.
Half the staff at Volkswagen’s PowerCo are industry veterans from Asia, Schmall said, enabling the battery unit to enter the industry at the top of the learning curve.
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Reporting by Victoria Waldersee; Editing by Susan Fenton
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SEOUL, March 15 (Reuters) – Samsung Electronics Co Ltd (005930.KS) on Wednesday said it will invest around 300 trillion won ($230 billion) by 2042 to develop what the government called the world’s largest chip-making base, in line with efforts to enhance South Korea’s chip industry.
The amount makes up most of the 550 trillion won in private-sector investment announced by the government on Wednesday, under a strategy that expands tax breaks and infrastructure support to increase the competitiveness of high-tech industries including those involving chips, displays and batteries.
Samsung’s manufacturing additions will include five chip factories and attract up to 150 materials, parts and equipment makers, fabless chipmakers and semiconductor research-and-development organisations, the Ministry of Trade, Industry and Energy said in a statement.
Other countries have announced plans to bolster domestic chip industries, including the United States which last month released details of its CHIPS Act, which offers billions of dollars in subsidies for chipmakers that invest in the country.
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South Korea, home to the world’s two biggest memory chip makers, Samsung Electronics and SK Hynix Inc (000660.KS), is seeking to improve supply-chain stability to become a major player in the non-memory chip field, currently dominated by chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) and Intel Corp (INTC.O).
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Reporting by Heekyong Yang and Joyce Lee; Editing by Christopher Cushing
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DUNTON, England, March 6 (Reuters) – Ford Motor Co’s (F.N) push to use reams of data generated by its vans and trucks – from engines to oil filters or brake pads – to attract more customers in the European and U.S. commercial vehicle market plays out on a 9-metre-long (30 ft) screen at its UK headquarters in Dunton east of London.
During a recent visit by Reuters, that screen showed real-time data from 114,000 vans in Britain so far covered by Ford’s FORDLiive monthly subscription service.
Ford employees were focused on the 98.3% of the vans that were in service – and of those, roughly 8% in need of repairs fairly soon or urgently – but concentrated even more so on the 1.7% vehicles out of action.
The U.S. automaker tracks 4,000 data points via modems it has installed in all commercial vehicles since 2019 – and can warn paying customers of engine problems and basics such as brake pad wear, low oil or diesel additives that are cheap to maintain proactively but expensive to fix if not addressed.
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The automaker has connected all of its UK dealers to its system, so it can arrange repairs and have parts ready for vans before they arrive at a dealership.
Ford, which leads the commercial vehicle market in both Europe and the United States, launched the system in 2021. Hans Schep, European head of Ford Pro, the company’s commercial vehicle business, said it is already close to hitting long-term targets of increasing vehicle “up time” by up to 60%.
Ford estimates that downtime, when a van is out of action, costs an average of 600 pounds ($724) daily per van.
“This has already been a major game-changer,” Schep said.
After a successful test run in Britain, Ford is also rolling out the FORDLiive service in mainland Europe and the United States. The automaker has focused more on its profitable Ford Pro business in Europe than lower-margin mass-market passenger cars.
Ford recently announced engineering job cuts in Europe, but is still hiring software experts for its data services.
Data is a huge battleground for commercial vehicle makers and competition will only intensify with electric models, which are essentially computers on wheels.
Using data to show where vans are, how they consume fuel, how drivers use or misuse them, whether they can skip an oil change, but above all avoiding downtime is becoming as important as the vehicles themselves.
There is also an ongoing fight pitting insurers, leasing companies and car repair shops against carmakers in the European Union over access to connected car data and the vast potential revenue it could generate.
“We plan to grow our leadership position,” said Ted Cannis, chief executive of Ford Pro. “We are going to have many, many more markets that we were not even previously in.”
EASING THE ELECTRIC JOURNEY
Electric vans provide far more data points for Ford and its rivals to work with – including tracking how much range they have left and providing easy, comprehensive charging solutions.
Ford’s Schep said providing that data is crucial for van fleets because according to the automaker’s research, 60% of its corporate customers “are really worried about the journey to electric.”
The UK operations of DHL Express, part of the Deutsche Post DHL Group (DPWGn.DE), has 270 electric Ford E Transit vans with firm orders for 120 more, and is signing up for FORDLiive.
Fleet director Richard Crook said aside from monitoring those vans’ batteries, he wants to tap Ford’s predictive maintenance capabilities.
“We need to get ahead of things and plan maintenance schedules because the vehicle is actually telling you ‘I have a problem,'” Crook said.
Ford rival General Motors Co (GM.N) has also rolled out telematics services including “in-vehicle coaching,” where a voice nicknamed “Karen in the vehicle” coaches drivers against excessive braking, speeding or other bad habits.
Michelle Calloway, director of OnStar Business Solutions at GM, said “Karen” cut fuel use by 30% in 30 days in one customer’s fleet.
“Those are impactful savings scaled across a large fleet,” Calloway said.
Starting with 2024 models, GM will provide a range of OnStar data services free for fleet vehicles. Ed Peper, who heads GM’s fleet sales, said once customers try those services, they are likely to pay for more.
Italian truck, van and bus maker Iveco Group NV (IVG.MI) has around 150,000 connected vehicles using telematics services and has seen a 30% increase in uptime, plus a “single-digit percent” drop in warranty costs so far, said chief technology officer Marco Liccardo.
Liccardo estimates subscription services will generate 40% to 50% of commercial vehicle makers’ profits by 2030 and help franchise dealers survive the shift to electric with fewer parts to service.
“Data will be the oxygen to do that,” Liccardo said.
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Reporting by Nick Carey in Dunton, England
Additional reporting by Giulio Piovaccari in Milan
Editing by Matthew Lewis
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BENGALURU, March 2 (Reuters) – U.S. home prices are forecast to decline modestly this year and by less than previously thought as demand has declined only slightly despite expectations that interest rates have further to rise, according to property analysts polled by Reuters.
Normally interest rate-sensitive home prices have only fallen about 6% from their recent peak, although the Federal Reserve is expected to deliver at least two more rate hikes, having already raised its key interest rate by 450 basis points from near-zero in just a year.
The decline has hardly dented a market, following a surge of more than 45% in average house prices since 2020 as buyers rushed in to avoid missing out, while people who could not afford to buy have been left paying higher rents.
Mortgage rates had been broadly declining since October but resumed their ascent in recent weeks on expectations the Fed will keep its federal funds rate higher for longer. But the latest housing data points to renewed strength in activity.
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The poll of 29 analysts, conducted between Feb. 15 and March 2, forecast average home prices based on the Case/Shiller index, which rose around 6% last year, were forecast to decline 4.5% in 2023, followed by no increase in 2024. That is slightly less than the 5.6% fall predicted three months ago.
They are expected to fall 10% from peak to trough, less than one-third of the slump during the 2007-08 global financial crisis (GFC), and also slightly milder than the 12% in a poll published in December.
“Buyers are ready to get back into the market. However, volatile mortgage rates, which had dropped in January, encouraging sales activity, will continue to pose affordability challenges, limiting demand,” said Crystal Sunbury, senior real estate analyst at RSM, a U.S.-based consulting firm.
While house prices probably had a bit further to fall, an overall housing shortage will broadly support these historically-elevated levels, Sunbury said.
Indeed, the U.S. outlook was a bit more optimistic than other similar housing markets, like Canada and Australia, which are set to mark bigger falls this year.
Although over 60% of analysts, 16 of 25, said purchasing affordability would improve over the coming year, they were split on how home ownership would change in the next two to three years. While 13 said it would decrease, 12 said it would increase.
“There are growing signs stretched affordability is weighing on home ownership, particularly for those (aged) under 35. We expect this to persist in the coming quarters,” said Sam Hall, property economist at Capital Economics.
“We don’t think affordability will return to its post-GFC levels or even its pre-pandemic average in the coming years.”
The 30-year fixed mortgage rate, currently at 6.5%, will average 6.35% this year, the poll found.
As owning a home looks to be a distant dream for many, especially for those who have not seen such high rates in their lifetime, rents are also climbing.
Rental price inflation, one of the primary reasons overall inflation has remained sticky, will average 2.1% this year and surpass core inflation in 2024 and 2025, the survey showed.
(For other stories from the Reuters quarterly housing market polls:)
Reporting by Indradip Ghosh and Prerana Bhat; Polling by Susobhan Sarkar and Sujith Pai; Editing by Hari Kishan, Ross Finley and Simon Cameron-Moore
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WASHINGTON, Feb 21 (Reuters) – U.S. existing home sales dropped to the lowest level in more than 12 years in January, but the pace of decline slowed, raising cautious optimism that the housing market slump could be close to reaching a bottom.
The report from the National Association of Realtors on Tuesday also showed the smallest increase in annual house prices since 2012, which should help to improve affordability. It will, however, be a while before the housing market turns the corner.
Mortgage rates have resumed their upward trend after robust retail sales and labor market data as well as strong monthly inflation readings raised the prospect of the Federal Reserve maintaining its interest rate hiking campaign through summer.
“The marginal decline in existing home sales in January supports our view that housing market activity is reaching a trough,” said Sam Hall, property economist at Capital Economics. “But growing economic headwinds and stretched affordability mean sales will recover only gradually this year.”
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Existing home sales fell 0.7% to a seasonally adjusted annual rate of 4.00 million units last month, the lowest level since October 2010, when the nation was grappling with the foreclosure crisis. That marked the 12th straight monthly decline in sales, the longest such stretch since 1999.
Sales fell in the Northeast and Midwest, likely because of harsh weather, but rose in the South and West.
Economists polled by Reuters had forecast home sales rising to a rate of 4.10 million units. Home resales, which account for the biggest share of U.S. housing sales, plunged 36.9% on a year-on-year basis in January.
The housing market has been the biggest casualty of the Fed’s aggressive monetary policy tightening. Residential investment has contracted for seven straight quarters, the longest such stretch since 2009.
Government data last week showed single-family homebuilding and permits for future home construction declining in January.
The 30-year fixed mortgage rate rose to an average 6.32% last week from 6.12% the prior week, according to data from mortgage finance agency Freddie Mac. The second straight weekly increase reflected a spike in U.S. Treasury yields.
Stocks on Wall Street were trading lower. The dollar rose against basket of currencies. U.S. Treasury prices fell.
HOPEFUL SIGNS
But there are some rays of hope. Homebuilders confidence rose to a five-month high in February, though morale remains depressed. The median existing house price increased 1.3% from a year earlier to $359,000 in January as homeowners whose properties have been on the market for a while lowered asking prices. That was the smallest annual gain since February 2012.
Properties typically remained on the market for 33 days last month, up from 26 days in December.
“Buyers are beginning to have better negotiating power,” said NAR chief economist Lawrence Yun. “Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.”
There were 980,000 previously owned homes on the market, up 2.1% from December and 15.3% from a year ago. But this mostly reflected homes staying on the market longer than in prior months. New listings remained low.
At January’s sales pace, it would take 2.9 months to exhaust the current inventory of existing homes up from 1.6 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Fifty-four percent of homes sold in January were on the market for less than a month. First-time buyers accounted for 31% of sales, up from 27% a year ago. All-cash sales made up 29% of transactions compared to 27% a year ago.
While the housing market is still searching for a floor, business activity rebounded in February, reaching its highest level in eight months, according to a survey on Tuesday.
S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 50.2 this month from a final reading of 46.8 in January.
That ended seven straight months of the index running below the 50 mark, which indicates contraction in the private sector. The services sector accounted for the rise in business activity, while manufacturing remained weak. Economists had forecast the index at 47.5.
The rebound in business activity fits in with the recent robust retail sales, the labor market and manufacturing production data, which have suggested solid momentum in the economy at the start of the year.
“The economy is finding its balance,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Chizu Nomiyama
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WASHINGTON, Feb 16 (Reuters) – Boeing (BA.N) said on Thursday it is merging its aircraft financing arm into its commercial airplanes business unit as part of a push to simplify its corporate structure.
After the retirment of Boeing Capital Corp (BCC) President Tim Myers this spring, Boeing said it will “realign” the financing arm within the commercial airplane unit while still maintaining “strong coordination” with the company’s treasury arm. Airfinance Journal earlier reported the move.
Boeing Capital, a subsidiary of Boeing, provides asset-based financing and leasing to prospective commercial jet buyers. By moving the financing organization under its commercial airplane unit, the Boeing hopes it can simplify the buying process for customers.
The realignment will “focus resources on our core work of supporting our customers and their financing needs,” Boeing Chief Financial Officer Brian West said in an internal memo viewed by Reuters.
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A Boeing spokesperson said the shift will provide airline customers “with more consistent support” for arranging aircraft financing.
Rob Martin, finance chief for the commercial airline business, and Boeing Treasurer David Whitehouse will be responsible for the transition, West said in the memo.
The closure of Boeing Capital continues a trend for Boeing to consolidate operational structure. The company in November announced a reorganization of its defense unit aimed that halved its business divisions.
Reporting by Valerie Insinna; editing by Ben Klayman and Stephen Coates
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Jan 20 (Reuters) – Land Securities Group Plc (LAND.L), Britain’s top commercial property landlord, has appointed broadcaster Channel 4’s Ian Cheshire as its next chairman, the company said on Friday.
The new Landsec chairman takes over the mantle at a time when UK commercial property values are seeing a slump, pressured by rising interest rates and broader economic uncertainty.
Aggressive interest rate hikes to tame stubborn inflation and deepening recession worries are dampening a tentative recovery in the British commercial property sector from the pandemic fallout.
Cheshire, the chairman of Channel 4 and private hospital operator Spire, replaces Cressida Hogg, who was named the next chair of defence firm BAE Systems (BAES.L) last year.
He will join the Landsec board in a non-executive capacity on March 23 and take over the chairman’s role on May 16, when Hogg retires after almost five years in that position.
Cheshire, 63, is currently a non-executive director at BT Group (BT.L) and will retire from the communications firm at their annual general meeting in July.
A veteran in the retail industry, Cheshire had joined Channel 4’s board last April and was in the forefront of discussions with the British government over its now-abandoned privatisation plan.
Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Savio D’Souza and Sherry Jacob-Phillips
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LONDON, Jan 11 (Reuters) – Self-driving software startup Oxbotica has raised $140 million from investors to speed deployment of autonomous vehicles (AVs) in areas including heavy industry, ports and airports.
The Series C round includes funding from new investors including Japanese insurer Aioi Nissay Dowa Insurance, the venture capital arm of software company Trimble (TRMB.O) and the venture capital arm of Japanese oil refiner Eneos (5020.T).
It also includes fresh funding from existing investors including Tencent (0700.HK) and the venture capital arm of BP (BP.L), as well as Kiko Ventures, the clean tech investment platform of IP Group (IPO.L) and Oxbotica’s first institutional investor.
Oxbotica has now raised about $225 million in total and the company said that additional investors are expected to sign up before the funding round closes in a few months.
The startup is working on specific applications for strategic investors. These include AVs for remote BP locations, a people mover for German auto parts supplier ZF Friedrichshafen and for last-mile delivery by British online supermarket and technology group Ocado (OCDO.L).
The clamour for robotaxi applications, however, appears to have subsided.
Ford Motor Co (F.N) said in October that it was winding down its Argo AI self-driving business, saying robotaxis were still too far off to continue investing.
Oxbotica Chief Executive Gavin Jackson told Reuters that AVs using the startup’s software will enter service in 2023 in the energy and agriculture sectors, plus private truck yards, followed by fixed-route passenger shuttles in 2024.
Once regulations catch up with the industry, the company will start running tests on limited routes for Ocado in 2025, Jackson said.
He said the company has customers in mining, construction, agriculture, airports, ports and the logistics sector, all of which want safe and reliable AVs.
“These are the applications that matter,” Jackson said. “The proceeds (of this funding round) will really accelerate deployment for our commercial customers.”
Reporting by Nick Carey
Editing by David Goodman
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WASHINGTON/LONDON, Dec 20 (Reuters) – Boeing (BA.N) Commercial Airplanes is tapping the sales chief who helped lead the U.S. planemaker through two major crises in recent years to oversee fractured global supply chains as the aerospace industry battles to meet resurgent jet demand.
Ihssane Mounir has been named senior vice president of global supply chain, Boeing Commercial Airplanes Chief Executive Stan Deal said in an email to employees. Mounir was previously senior vice president of commercial sales and marketing.
Deal told the company’s 1,200 direct suppliers in a separate memo that Mounir would lead internal and external supply chains and integrate strategy and requirements across all programs.
The decision to unite in-house fabrication and the external supply chain restores a structure used in the past and comes as the industry fights post-COVID disruption on a broad front.
“As an industry, while we are seeing strong indications of global market resilience and recovery, we are still working to drive stability and predictability in our factories,” Deal said in the memo to suppliers, which was seen by Reuters.
During an unusually long six-year stint as sales chief, Mounir helped steer Boeing through the twin crises of fatal crashes that led to the grounding of the 737 MAX and the COVID-19 pandemic – a period during which rival Airbus SE (AIR.PA) emerged as largest planemaker by number of deliveries.
He made headlines in 2019 with a tentative sale of 200 MAX to British Airways owner IAG (ICAG.L)
, stealing the Paris Airshow from Airbus in a deal seen as a rescue package for the floundering jetliner just as Boeing was sliding into a two-year crisis.
The number of planes involved fell to 50 when the deal was finalized after the pandemic, but the original coup was credited with easing doubts over the future of Boeing’s biggest cash cow.
Boeing went on to sell 1,300 MAX jets under Mounir since the lifting of the safety ban, offsetting a slew of cancellations, although Airbus still leads the coveted top of the segment.
Industry sources have said Boeing is also poised to sell 190 MAX and 30 larger 787s as part of a fleet shake-up involving a total close to 500 jets at Air India, roughly split with Airbus.
Among other moves, Deal said Brad McMullen, vice president of commercial sales North America, would succeed Mounir in his sales position while Kim Smith was named to the new role of vice president of Boeing Global Services (BGS) Total Quality.
McMullen has for several years driven strategically important accounts in Boeing’s home market, where United Airlines (UAL.O) last week ordered 100 MAX and 100 787s, again upstaging Airbus whose own United order for 45 A350s now looks uncertain.
Former aerodynamicist Mounir must now deal with separate turmoil in supply chains that have been disrupted by the factory bottlenecks and labor shortages seen worldwide post-COVID.
Deal told reporters last week that Boeing faces a number of supply-chain issues.
“One thing that we’re going to be very mindful of is to make sure we run a disciplined (production) ramp-up,” he said.
Reporting by David Shepardson in Washington and Tim Hepher in London; Editing by Matthew Lewis and Leslie Adler
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TAIPEI, Dec 19 (Reuters) – Foxconn (2317.TW), the world’s largest contract electronics maker, is likely to be fined soon by Taiwan’s government for an unauthorised investment in a Chinese chip maker, a person with direct knowledge of the situation said on Monday.
Taiwan, which Beijing views as sovereign Chinese territory, has turned a wary eye on China’s ambition to boost its semiconductor industry and is tightening legislation to prevent what it says is China stealing its chip technology.
Foxconn, a major Apple Inc (AAPL.O) supplier and iPhone maker, disclosed in July it was a shareholder of embattled Chinese chip conglomerate Tsinghua Unigroup, but said late on Friday it would be selling the stake. Taiwan said on Saturday it would fine Foxconn over the investment.
Taiwan’s government, which needs to approve all outbound investments, had not approved the deal. Taipei also prohibits companies from building their most advanced chip foundries in China to ensure they do not site their best technology offshore.
The person familiar with the situation told Reuters that the Economy Ministry would contact Foxconn on Monday to confirm the equity sale.
“Even though the investment was later pulled the fact has already been established that they invested first, and they will be fined,” said the source, who was not authorised to speak to the media.
“It should not take too long for Hon Hai to be punished,” the source added, referring to the company’s formal name, Hon Hai Precision Industry Co Ltd.
Reuters has previously reported that the company could be fined up to T$25 million ($813,749). read more
Foxconn declined to comment.
Tsinghua Unigroup has not responded to a request for comment on the investment being pulled.
Taiwanese law states the government can prohibit investment in China “based on the consideration of national security and industry development”. Violators of the law can be fined repeatedly until corrections are made.
Foxconn has been seeking to acquire chip plants globally as a worldwide chip shortage rattles producers of goods from cars to electronics. It is keen to make auto chips in particular as it expands into the electric vehicle market.
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Reporting by Jeanny Kao and Yimou Lee; Writing by Ben Blanchard; Editing by Kenneth Maxwell
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