Photo: Reuters/Tyrone Siu
Photo: Reuters/Tyrone Siu

Taiwan-based Foxconn Technology is reportedly set to launch a massive semiconductor manufacturing project in mainland China as Beijing’s push to lead high-tech industries has become a focal point of trade tensions.

Nikkei Asian Review first reported the planned investment which sources said will total around US$9 billion, a majority of which is being subsidized by the Chinese government.

The new production facility is expected to propel Foxconn into competition with leading chipmakers such as Taiwan Semiconductor Manufacturing Co.

The plant, which will be located in the southern city of Zhuhai, could also help reduce Foxconn’s reliance on Apple as demand for smartphones slows. Foxconn depends on Apple for more than half of its annual revenue.

Sources said the project could be delayed or changed because of political issues.

Beijing’s “Made in China 2025” industrial policy, which maps out a plan for China to become a leader in high-tech industries, has drawn the ire of the Trump administration, including in the report calling for the tariffs that are currently in place. The issue of state subsidies has been one of the most often cited gripes among US officials.

While Beijing has sent signals that it is willing to change the language of the industrial policy, there is little expectation that they would change the substance of a plan that is crucial to Beijing’s efforts to restructure its economy.