Hon Hai touts Plan B if Unigroup investment doesn’t get approval

TAIPEI, Aug. 10 (CNA) Liu Yang-Wei, chairman of Taiwan-based manufacturing giant Hon Hai Precision Industry, said Wednesday that it has a back-up plan in case it fails to obtain regulatory approval in Taiwan. Investment in Tsinghua Unigroup, a Chinese semiconductor conglomerate.

At an investor meeting, Mr Liu said that Mr Hon Hai believes the CNY 5.38 billion (US$795.86 million) investment in Tsinghua Unigroup is legal, but that the government has raised concerns about the investment. iPhone assemblers should have contingency plans if they have and do not give retroactive approval. However, he did not reveal the details of the plan.

In mid-July, Hon Hai, also known worldwide as Foxconn, announced an investment by its Shanghai Stock Exchange-listed subsidiary, Shenzhen-based Foxconn Industrial Internet Co., through Beijing Zhiguangxin Holdings Co., Ltd. announced that Unigroup shares under the restructuring agreement.

controversial deal

In Taiwan, Hon Hai’s investment has raised concerns that it will help boost China’s chip-making capabilities and make it more competitive internationally.

early Wednesday, Quoted by the Financial Times An unnamed Taiwanese government official involved in national security matters reports that authorities want to force Hon Hai to “roll back” its investment in Tsinghua Unigroup.

Facing debt problems after a recent restructuring, Unigroup spun off its chip-making businesses including Yangtze River Memory Technology and Wuhan Xinxin Semiconductor Manufacturing, Liu said.

Currently, Unigroup mainly engages in non-chip manufacturing operations, such as IC design and production of servers, routers and exchange boards, to meet Hon Hai’s needs for future business growth, he added.

Furthermore, the investment aims to establish business relationships with Unigroup members, either as suppliers or clients for future cooperation, he added.

Hon Hai is optimistic about Unigroup’s prospects after the restructuring, said Liu.

Hon Hai is already one of the largest foreign investors in China, operating a wide range of production bases, employing over 1 million people and developing high-tech equipment for international brands such as Apple Inc. doing.

Before the investor conference began, Hon Hai posted a record second quarter net profit of NT$33.29 billion, up 12% from the same period last year and up 13% from the previous quarter.

bright prospects

Although there are signs that global demand for smartphones is weakening, Liu remains optimistic about the second half of the year as Hon Hai focuses on mid- to high-end smartphones, which are expected to be less affected by rising inflation. said it was.

As a result, Liu expects Hon Hai’s gross margin (the difference between revenue and cost of goods sold) to improve in the second half of the year from 6.22% in the first half.

Regarding the third quarter, Liu said that although Hon Hai’s consolidated sales will be little changed from the second quarter, it will increase from the same period last year as the sales of cloud/networking products are expected to increase significantly from the same period last year. said to do.

In the second quarter, Hon Hai’s consolidated revenue reached NT$1.51 trillion, up 12% year-on-year and up 7% quarter-on-quarter.

For 2022 as a whole, Hon Hai’s revenue is expected to grow year-on-year, compared with May’s forecast of little change year-over-year, with revenues from cloud/networking, computing, and electronic components expected, Liu said. said to increase slightly in to keep growing. Hon Hai touts Plan B if Unigroup investment doesn’t get approval

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