Infineon Launches Chip Venture With Chinese Car Giant SAIC

(Bloomberg) -- German chipmaker Infineon Technologies AG is teaming up with SAIC Motor Corp Ltd., China's largest automaker by sales volume, to benefit from the quickly growing demand for electric cars in the country.

Infineon and SAIC will set up a joint company to produce power modules for Chinese manufacturers of electric cars and plug-in hybrids, jointly investing at least 100 million euros ($122 million) and hiring 250 people to expand Infineon's chip factory in Wuxi.

The electric car boom, which has produced global sales exceeding more than 1 million units last year according to Bloomberg New Energy Finance, is a boon for Infineon.

The Chinese government is putting its might behind establishing the country at the forefront of the industry. Already, Chinese drivers buy more electric vehicles than those in any other country, and the government is targeting production of 7 million such cars by 2025.

China's Drive to Become the Detroit of Electric Cars: QuickTake

“China has become the pioneer of the EV market that's about to take off,” Jochen Hanebeck, an Infineon board member responsible for operations, said in a phone interview. "SAIC can help us to be the leader in this promising market.”

Last year SAIC, a local partner of Volkswagen AG and General Motors Co., said it would jointly invest more than 10 billion yuan ($1.6 billion) with Chinese battery maker Contemporary Amperex Technology Co.

The joint venture means Infineon, which competes with NXP Semiconductors NV and STMicroelectronics NV when it comes to selling chips to the automotive industry, can save on import taxes, and tap the expertise of state-owned SAIC when buying supplies locally, Hanebeck said.

Called SAIC Infineon Automotive Power Modules, the JV is headquartered in Shanghai and will start volume production in the second half of this year, Infineon said Friday in a emailed statement. The companies will share the profits of selling the modules.

Last year, Daimler and China's BAIC Motor Corp. announced a 5 billion yuan joint investment for battery operated EVs. The venture's electric EQ crossover is scheduled to be rolled out in the next couple of years.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net.

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly Schuetz

©2018 Bloomberg L.P.