The merger between Honda and Nissan, the world's second and third largest automakers, which had attracted global attention, fell through, leading to renewed speculation about whether Taiwan's Foxconn, the largest supplier of Apple iPhones, would pursue the acquisition of Nissan. Foxconn, which has faced difficulties in the electric vehicle business, desires to acquire or invest in Nissan to secure production capacity. However, Nissan is a target corporation that undergoes scrutiny from the Japanese government for overseas investments, hence it may not be easy for Foxconn to acquire or invest in Nissan.
According to Nikkei (Nihon Keizai Shimbun) on the 6th, Honda and Nissan announced plans to merge in late December last year because Foxconn had shown interest in Nissan. In the fall of last year, Foxconn approached the trust bank holding 22.8% of Nissan shares, as well as Japan's Ministry of Economy, Trade and Industry, to explore the possibility of acquiring Nissan, and secretly negotiated to acquire equity stakes with Renault, Nissan's major shareholder.
To this end, Jun Seki, the chief strategic officer of Foxconn's electric vehicle division, traveled to France to negotiate with Renault. Seki has previously held a senior position at Nissan and served as president of Nidec, a Japanese electric motor manufacturer, before joining Foxconn in 2023. Nikkei reported that "Nissan, noticing Foxconn's moves, held private meetings to find ways to defend itself, and Honda and Nissan began discussions on a strategic partnership in March 2024, announcing the merger talks in December."
Foxconn lowered its profile following Nissan's announcement of the merger with Honda. Nikkei stated, "Liu Yangwei, Foxconn's chairman, did not want to cause friction with the Japanese side, and Foxconn subsequently reduced its activities related to Nissan." Since the summer of 2023, Chairman Liu has been visiting Japan monthly to oversee the overall management of his subsidiary, Sharp. Foxconn has also announced plans to develop the Japanese market for electric vehicles and collaborate with Sharp.
With Nissan's board of directors deciding on the 5th to withdraw from merger discussions with Honda, an opportunity for Foxconn to pursue the acquisition of Nissan has reopened. Foxconn may propose restructuring to Nissan along with an investment offer, or may push for an acquisition including a voluntary acquisition proposal. Fumihiko Sankyo, executive director of Itochu Research Institute, mentioned to Nikkei that "Nissan could benefit from a partnership with Foxconn, which boasts significant capabilities in procuring cutting-edge semiconductors." However, from Nissan's perspective, if Foxconn were to partake in managing Nissan, there would be a risk of having to implement restructuring measures. Nissan has already announced a restructuring plan to cut 9,000 employees globally last November and reduce its production capacity by 20%.
Foxconn's interest in Nissan stems from its poor performance in the electric vehicle market it entered in 2019. Foxconn offers services to design and manufacture electric vehicles. In September last year, it announced plans to develop its own electric vehicles using components technology from Sharp. However, revenues from electric vehicle design and manufacturing stood at just 39 billion yen last year, accounting for only 6% of Foxconn's total revenue. The successive bankruptcies of electric vehicle startups in the United States, which were major clients of Foxconn, had an impact. Foxconn set a goal to achieve a 5% share of the global electric vehicle market this year, but whether it can meet this goal remains uncertain. The aggressive advance of Chinese smartphone manufacturer Xiaomi into the electric vehicle market is also a factor threatening Foxconn.
If Foxconn acquires or invests in Nissan, it could establish an electric vehicle supply chain in Asia. Nissan has production bases in Kyushu, which is home to semiconductor and battery manufacturers in Japan. Foxconn could utilize Nissan's surplus production capacity for its own electric vehicle production. Additionally, it could obtain electric vehicle manufacturing know-how and global sales capabilities from Nissan. However, it remains uncertain whether Nissan can be acquired by Foxconn, as Nissan is a Japanese corporation subjected to formal scrutiny for overseas investments, and there are strong concerns within the Japanese government regarding Foxconn's acquisition of Nissan.
Meanwhile, Honda and Nissan announced in December last year that they would begin discussions to integrate their management by establishing a holding company, with both companies becoming subsidiaries of the holding company. The initial plan was for the integrated holding company to launch in August next year. However, the opportunity for the two companies to merge and become the world's third-largest automaker by sales volume (over 8 million units) disappeared when Nissan did not accept Honda's proposal to become its subsidiary.