PETALING JAYA: Dagang Nexchange Bhd (Dnex) is teaming up with Taiwanese semiconductor giant Hon Hai Precision Industry Co Ltd, better known as Foxconn, to build and operate a wafer fabrication plant in Malaysia.

       In a filing with Bursa Malaysia, Dnex said it has signed a memorandum of understanding (MoU) with a unit of Foxconn, Big Innovation Holdings Ltd (BIH), with the intent to set up a joint-venture company to build and operate the 12-inch wafer fabrication plant.

       The facility is targeted to produce up to 40,000 wafers per month in the 28-nanometer and 40-nanometer technology.

       “The entry into the MoU forms a basis of commitment between the company and BIH to undertake the agreed role and responsibilities in creating a mutual understanding of the strategy and business needs between the parties to enable broader understanding for the benefits and opportunities of working with each other and create opportunities for future partnerships for the parties in relation to the proposed project,” Dnex said.

       In a separate statement, Dnex group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir said the project will allow the group and the country to leap forward in semiconductor technology.

       He believed that the partnership would offer a multitude of economic spillover effects to the country, in line with the government’s national agenda.

       “The plant will be the first 12-inch wafer fabrication plant in Malaysia initiated by a bumiputera company. In addition, the plant will be operating in the 28-nanometer technology node, which is the most advanced technology.

       “This technology node will have a long production life and have the widest range of applications,” he said.

       Last year, Foxconn emerged as a substantial shareholder in Dnex with a 5.03% stake at 90 sen per share.

       Foxconn was one of the bidders vying with DneX to acquire semiconductor wafer fabrication SilTerra Malaysia Sdn Bhd.

       Last July, Dnex and Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre (CGP Fund) bought a 100% stake in Silterra from Khazanah Nasional Bhd.

       The acquisition has transformed Dnex into a major player in the semiconductor industry in Malaysia.

       Under the MoU, Dnex and BIH will be working together to decide the location of the plant, financing structure and the management team. The MoU is valid for a period of one year commencing from May 17, 2022, and may be further extended by mutual agreement by the parties.

       Syed Zainal said the building of the plant is part of the group’s strategy to explore new opportunities in the technology field, riding on the strong global demand of semiconductors globally.

       “The plant will further strengthen Dnex’s position in the semiconductor industry as well as complement the group’s business via its existing investment in SilTerra.

       “The country’s semiconductor sector plays a vital role in the global semiconductor supply chain and with the project, we hope to further enhance the sector’s capabilities and robustness,” he added.