Foxconn in talks to buy stake in Malaysian chipmaker DNeX

FOXCONN Technology Group is in talks to buy a stake in Malaysian technology firm Dagang NeXchange (DNeX), according to sources, after losing to it in bidding for a semiconductor company.

The main assembler of Apple's iPhones could take a minority stake in DNeX and help to expand the business of its chipmaker SilTerra Malaysia, one source said. DNeX landed the winning offer in the sale of SilTerra in February, outbidding Foxconn.

Talks are ongoing and could fall apart, and there is no certainty that a deal will materialise, the sources said. A representative for DNeX said the company is always open to discussion with strategic partners and investors, but that it cannot comment on any specific discussion. A Foxconn representative declined to comment.

Shares in DNeX rose as much as 13.6 per cent in Kuala Lumpur following the Bloomberg News report, their highest intraday level in more than a month, giving the company a market value of about US$474 million.

A stake sale would come as the Taiwanese electronics manufacturer, whose primary listed arm is Hon Hai Precision Industry, has been growing its footprint in electric vehicles, issuing a steady stream of announcements beginning with the unveiling of its first-ever electric vehicle chassis and a software platform in October. Since then the company has struck agreements with Chinese firms Zhejiang Geely Holding Group and Byton, the US's Fisker and European giant Stellantis.

DNeX and a Chinese investor won their bid in February to purchase SilTerra from Malaysian sovereign wealth fund Khazanah Nasional Bhd. for RM273 million (S$87 million). Hon Hai chairman Young Liu later told reporters that the company still wanted to secure a partnership with SilTerra.

DNeX has received shareholder approval for a private placement of as much as 30 per cent of its shares, and will use the proceeds to pay for the SilTerra deal as well as other investments, according to a statement on May 20. The Malaysian tech company will acquire 60 per cent of SilTerra, while its partner in the deal, Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Center, will buy the remaining 40 per cent.

Established in 1970, DNeX's businesses include information technology and undersea cables for telecommunications as well as an oil and gas unit, according to its official website. BLOOMBERG