KUALA LUMPUR — The same Malaysian chip foundry that slipped through Foxconn’s fingers in February is now the reason the Taiwanese giant is coming back to the negotiating table. And this time, it is not chasing the factory itself — it is chasing a stake in the company that owns it.
Foxconn Technology Group, the world’s largest contract electronics manufacturer, is in talks to buy up to 30 percent of Dagang Nexchange Bhd, or DNeX, according to two people with direct knowledge of the matter. DNeX, together with a Chinese state-backed fund, outbid Foxconn and Macquarie Capital for SilTerra Malaysia Sdn Bhd in a February auction. The winning bid: RM 273 million.
Now Foxconn wants in on the other side.
The deal, if it happens, would see Foxconn subscribe to a private placement of DNeX shares — an issuance shareholders already approved on 20 May. No price or timetable has been set. Either side can still walk away. One source, speaking on condition of anonymity because the talks are private, put it bluntly: “They want a foot in the door, not control.”
A DNeX spokesperson confirmed the company is “open to strategic partners” but would not confirm Foxconn by name.
SilTerra’s fab sits in Kulim Hi-Tech Park, a sprawling industrial zone in northern Malaysia. It turns out 40,000 eight-inch wafers a month, using process nodes between 180 nm and 110 nm. That range is old by the standards of cutting-edge logic chips. But it is exactly the range where power-management chips and automotive semiconductors are made — the very chips that have been in acute global shortage for more than a year.
Foxconn needs that capacity. The company assembles iPhones for Apple and is pushing hard into electric vehicles. Both require steady supplies of those mature-node chips. Hon Hai Precision Industry Co., Foxconn’s listed flagship, is leading the talks.
The February auction loss stung. Young Liu, Hon Hai’s chairman, told reporters at the time that his team “never gave up” on SilTerra. The new approach suggests he meant it.
But there is a geopolitical layer to this story that no one in the room is ignoring. Washington has pressed allies to keep semiconductor manufacturing capacity out of Chinese state ownership. Yet 40 percent of SilTerra is already held by Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre — a Chinese state-backed entity. Adding a Taiwanese shareholder would dilute that stake. It would also give Foxconn a production foothold in Southeast Asia, a region where it already has massive assembly operations.
Foxconn is not the only company scrambling for chip capacity. Automakers from Detroit to Stuttgart have idled assembly lines for want of these simple eight-inch wafers. The shortage has exposed how dependent the global supply chain is on a handful of older fabs, mostly in Taiwan, South Korea, and now increasingly in Malaysia.
SilTerra’s technology is not exotic. Its fab runs 180 nm and 110 nm processes — nodes that were state of the art in the late 1990s. But they are the nodes that run the microcontrollers in car brakes, the power regulators in phone chargers, the sensor interfaces in industrial robots. They are the chips nobody thought about until they disappeared.
For DNeX, the deal is about cash. The company needs capital to upgrade SilTerra’s eight-inch wafer lines. A deep-pocketed partner like Foxconn, with its Apple contracts and EV ambitions, could provide that. For Foxconn, the deal is about insurance — a guaranteed slice of output from a fab that makes the chips its customers cannot live without.
The talks are private. The outcome is uncertain. But the logic of the deal is plain: one company needs capacity, the other needs capital, and both are staring at the same factory.
