Stuttgart ZF has found a partner for its axle business in the electronics industry. The second largest German auto parts supplier is founding a joint venture with the Apple supplier Foxconn. The contract manufacturer from Taiwan is the world’s largest electronics manufacturer – and has attracted the attention of the industry with its ambitions to enter the electromobility business.
“With Foxconn we have gained a strong strategic partner with whom we can open up new perspectives and opportunities for ZF Chassis Modules GmbH,” said ZF CEO Holger Klein. The partnership is suitable for “opening up new customer groups together and expanding the presence, particularly in growth markets”. ZF Chassis Modules combines axle components with components such as brakes and entire drive systems and delivers them to the respective production on time.
ZF’s spin-off axle business employs around 3,300 people at 25 locations, including in China. The sales volume is four billion euros, the division is valued at one billion euros, according to the company. This means that the foundation company should receive around half a billion euros from the joint venture.
500 million euros flow into the ZF coffers
That’s money that ZF gets its due. The Friedrichshafen-based company still has ten billion euros in debt from the takeovers of smaller competitors TRW and Wabco. Rising interest rates increase this burden.
ZF boss Klein, who has been in office since the beginning of the year, has therefore defined business areas in which the company no longer wants to invest or no longer wants to invest alone. On the sales list are the passive safety systems (airbags) and the shuttle business. Original plans to find partners here by the end of the year are still dragging on. At least a partial success has now been achieved in the axle business.
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Foxconn already surprised in 2019 with the announcement that it wanted to join the ranks of the big electric car manufacturers as a contract manufacturer. The company, which is actually called Hon Hai Technology Group, is primarily known as Apple’s purveyor to the court for iPhone.
With more than 200 billion dollars, Foxconn is now one of the top-selling companies in the world. The manufactured parts and products are considered key components, also worldwide, be it in smartphones, game consoles or computers.
Electric cars instead of iPhones
The partnership with ZF takes the Taiwanese conglomerate one step further in its car plans. “The diligence and dedication of ZF Chassis Modules GmbH will result in successful value creation for our shareholders,” said Young Liu, Foxconn chairman and CEO. Production takes place mainly in Taiwan, China, India and Vietnam, where low location costs are combined with a high level of manufacturing quality.
Foxconn has already presented its own electric cars with the Foxtron Model B, C and V vehicles. In addition, the company manufactures key components such as electric power steering (EPS), solid state batteries, silicon carbide power module and various semiconductors.
The Taiwanese are vigorously expanding their holdings, investments and supply chains for electric cars and semiconductors. “We are very interested in developing further partnership opportunities with ZF in the transport and mobility area,” said the Foxconn CEO. The supply industry will keep an eye on this.
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