Taiwanese contract electronics assembler Foxconn is a potential bidder for Chinese-owned Singaporean chip assembler and testing business UTAC Holdings in what could be a $3 billion (£2.2bn) deal, Reuters reported.
UTAC’s owner, Beijing-based private equity firm Wise Road Capital, has hired Jeffries to begin a sale process for UTAC and is expected to bring in non-binding bids by the end of May, the report said.
The sale comes amidst increasing polarisation in the global chip industry, with the US seeking to bar China from advanced technology as China seeks greater self-sufficiency.
Chip business
UTAC is expected to attract interest from non-US potential buyers due to its presence in China, where it has production facilities, the report said.
Founded in 1997 in Singapore, UTAC assembles and tests chips for various industries including consumer, computing and security devices and medical applications.
It has other production facilities in Thailand and Indonesia and a global sales network including the US, Europe and Asia.
It sells services primarily to companies that outsource chip fabrication, as well as integrated device manufacturers and wafer foundries.
Reuters said its source indicate UTAC has annual adjusted earnings of about $300m.
Foxconn is a major supplier to Apple and is the world’s biggest contract electronics manufacturer, but has expanded into making chips in recent years as part of a long-term growth strategy that also includes a massive investment in electric vehicles.
The company, whose assembly facilities are mostly in China, moved to diversify its operations as Apple began moving its operations to other countries such as Vietnam and India, a trend that has accelerated this year amidst increased tariff battles between the US, China and other regions.
Diversification
In February Foxconn launched construction of a massive global headquarters for its New Business Development Group, which includes electric vehicles, with the facility located in Zhengzhou, China, the same area as its “iPhone City” plant.
Foxconn launched its diversification plan in 2019 as it seeks to expand into areas including EVs, semiconductors, robotics, artificial intelligence, 5G telecommunications and digital health.
The new headquarters, whose site was chosen in 2023, is to span 70,000 square metres and Foxconn plans to spend 1 billion yuan ($140m, £110m) to build it.