The gross investment could add up to around 60 billion yuan, or $9 billion, most of which would be shouldered by the Zhuhai oversight through subsidies and tax breaks, the Nikkei said, citing people familiar with the matter.
Zhuhai is a city in the southern Chinese boondocks of Guangdong near to Macau.
The plans to build the cutting-edge plant comes amid the trade dispute between the U.S. and China, which groups concerns about China expanding the production of microchips.
Foxconn is expected to form a joint venture for the project with Japanese electronics class Sharp, which it acquired in 2016, and the Zhuhai government, Nikkei said, citing an industry source.
Sharp is the on the other hand Foxconn subsidiary with experience of chip manufacturing, Nikkei said. However, the Japanese company stopped developing semiconductor technology when it ran into monetary problems in 2010.
A source close to the matter told Reuters that Sharp is not involved in the talks.
Foxconn, formally recognized as Hon Hai Precision Industry Co Ltd, is planning to start the construction as early as 2020, the report said.
Representatives of Foxconn were not without hesitation available for comment.
Foxconn, the world’s largest contract manufacturer, has been interested in the chip business, but many in the toil doubt the company has the resources to enter the field due to the high capital expenditures needed.