Infineon Technologies, a chipmaker based in Germany, and SAIC Motor Company, the biggest automaker in China by sales volume, are teaming up to take advantage of the rising demand of electric vehicles in the world’s most populous country. The two firms will start a joint venture which will be responsible for producing power modules required by Chinese manufacturers of plug-in hybrids and electric cars.
SAIC and Infineon will jointly invest approximately $122 million. About 250 employment positions are expected to be created at the chip factory belonging to Infineon in Wuxi.
Last year it is estimated that over one million units of electric cars were produced across the globe. The government of China intends to make the country the global leader in the EV industry. Already more electric cars are sold in China than anywhere else in the world. By 2025 the Chinese government has set a production target of seven million electric vehicles. Part of the reason for the push towards electric vehicles by the Chinese government is to reduce pollution.
“China has become the pioneer of the EV market that’s about to take off. SAIC can help us to be the leader in this promising market,” a board member of Infineon Technologies, Jochen Hanebeck, told Bloomberg in a telephone interview.
In 2017 SAIC which is the local partner of General Motors and Volkswagen AG indicated that it would invest over $1.6 billion with Contemporary Amperex Technology, a Chinese battery maker.
According to Hanebeck the joint venture will see Infineon make savings on import taxes. The chipmaker will also use the expertise of SAIC, which is state-owned with regards to purchasing supplies in China. In the automotive chips sector, Infineon Technologies competes with STMicroelectronics NV and NXP Semiconductors NV.
SAIC Infineon Automotive Power Modules
The joint venture that will be established by the two firms will be known as SAIC Infineon Automotive Power Modules and will have its headquarters in Shanghai. Volume production is expected to begin in this year’s second half per a statement released by Infineon. Profits obtained by selling the modules will be share between the two firms.
This is not the first joint venture between a Germany-based firm and a Chinese one focusing on the manufacturing of battery-operated electric vehicles. Last year BAIC Motor Corp and Daimler announced an investment worth approximately 5 billion yuan aimed at EV. In the next few years the venture will launch the first EQ crossover.