Taiwan’s Foxconn Technology Group is negotiating to buy a minority stake in Malaysian rival Dagang Nexchange Bhd (DNeX) after losing a February auction for SilTerra Malaysia Sdn Bhd, the Kuala Lumpur-based chip foundry that DNeX and a Chinese state-backed fund acquired for RM 273 million. People close to the talks said on 1 June that Hon Hai Precision Industry Co., Foxconn’s listed flagship, wants silicon capacity to serve Apple and future electric-vehicle customers, while DNeX needs capital to upgrade SilTerra’s eight-inch wafer lines. No price or timetable has been set and either side can still walk away.
Foxconn returns to the table
Hon Hai chairman Young Liu told reporters in February that his team “never gave up” on SilTerra even after DNeX and Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre outbid Foxconn’s joint offer with Macquarie Capital. The new approach, described by two people with direct knowledge of the matter, would see Foxconn subscribe to a private placement of up to 30 percent of DNeX shares that shareholders approved on 20 May. “They want a foot in the door, not control,” one source said, asking not to be named because the talks are private. A DNeX spokesperson confirmed the company is “open to strategic partners” but declined to confirm Foxconn by name.
SilTerra’s strategic value
SilTerra’s fab in Kulim Hi-Tech Park produces 40,000 eight-inch wafers a month on process nodes between 180 nm and 110 nm, the sweet spot for power-management and automotive chips now in short supply worldwide. Washington has pressed allies to keep such capacity outside Chinese state ownership, yet 40 percent of SilTerra is already held by the Beijing fund. Adding a Taiwanese shareholder would dilute that stake and give Kuala Lumpur a geopolitical balancing act: welcome non-Chinese capital without angering Beijing, its largest trading partner. “Malaysia needs the technology; it does not need another Chinese veto,” said Murray Hiebert, senior associate at the Center for Strategic and International Studies.
Market cheers the rumor
Bloomberg’s report on 31 May sent DNeX shares up 13.6 percent in one day, the steepest climb since April, lifting market value to roughly US $474 million. Trading volume was five times the monthly average as local funds rotated into the counter. Analysts at Maybank Investment Bank raised their sum-of-parts target price to RM 1.05, citing “potential Foxconn premium,” though they warned the deal could still collapse. Retail investors piled in through online brokers, pushing daily turnover above 200 million shares for the first time in the firm’s 19-year listed history.
Foxconn’s broader chip push
The courtship fits Hon Hai’s 3+3 strategy: expand beyond iPhone assembly into EVs, digital health and robotics, all of which need custom silicon. Since October the company has unveiled an open EV platform, signed vehicle deals with Fisker, Stellantis and China’s Geely, and pledged a US $36 billion chip budget through 2025. Owning part of SilTerra would secure automotive-grade process nodes without the political scrutiny that sunk its bid for a stake in mainland foundry Semiconductor Manufacturing International Corp last year. “We are building a supply chain we can trust,” Liu said at the company’s annual general meeting on 31 May, repeating that Malaysia is “a natural partner” because of its neutral stance in the U.S.-China tech conflict.
KL walks a tightrope
Malaysian regulators must approve any stake above 5 percent in a strategic sector, and the Ministry of International Trade and Industry is already reviewing the share-placement plan. Officials want guarantees that Foxconn will keep R&D jobs in Kulim and transfer packaging technology to local universities. At the same time, China’s embassy in Kuala Lumpur has privately reminded Putrajaya that Beijing remains SilTerra’s largest single customer, buying wafers for home-grown smart-card makers. “We welcome investment from all quarters, but national interest comes first,” minister Mohamed Azmin Ali told parliament on 31 May, without naming either investor.
If the transaction closes, Foxconn would gain a reliable source of mature-node wafers free from Beijing’s export rules, while DNeX secures the cash and technical know-how to move SilTerra toward 90 nm and eventually 65 nm processes. Failure would leave the Taiwanese giant scrambling for capacity as EV orders accelerate, and could push Kuala Lumpur deeper into Chinese orbit. For now, traders watch every filing, betting that the next disclosure will decide whether Malaysia’s most sensitive fab stays a three-way tug-of-war or tilts firmly toward Taipei.
