Sat, Mar 20, 2004 - Page 10 News List

Hon Hai targets consumer electronics at German fair

BREAKING OUT The motherboard maker unveiled a new line of products under its Foxconn brand in what many analysts see as an attempt to enter a new sector

By Lisa Wang  /  STAFF REPORTER

Hon Hai Precision Industrial Co (鴻海精密), one of Taiwan's largest makers of electronics components, is trying to break into the consumer electronics business, analysts said yesterday, after the company unveiled its latest motherboard products under its own brand at the Cebit trade show in the German city of Hanover on Thursday.

"I see Hon Hai's move as an attempt to tap into the sizzling consumer electronics market, which is a brand new battleground for local original equipment makers," said Grace Chen (陳星嘉), an analyst at Insight Pacific Investment Research (月涵投顧).

"As standards for all digital home gadgets are still being established, Taiwanese companies hope to take the initiative," Chen said, although it was still uncertain which electronic products -- televisions, computers or game consoles -- will become the main device in the living room.

Hon Hai, which began business as an electronics connector maker in Taipei County, created a stir among local motherboard makers two years ago when it entered the industry. Last year, Hon Hai outranked Elite Group Computer System Co (精英電腦) and became the nation's second largest motherboard supplier in terms of shipments.

Taking one step further, the Taiwanese company unveiled a new lineup of its brand-name "Foxconn" motherboards, including the Micro BTX motherboard for microchip giant Intel Corp, on Thursday, the first day of the annual Cebit show, the world's biggest high-tech fair.

Hon Hai and its Taiwanese original design manufacture peers are trying to grab a slice of the new "digital home" market in an industry where gross margins are falling, Chen said.

Taiwanese companies supply 95 percent of the motherbords used in PCs around the world. They are expected to ship US$26.11 billion worth of motherboards in the first quarter of this year, down 12.9 percent from the previous quarter, according to statistics released by the government-funded market researcher Institute for Information Industry (資策會) last month.

Molly Lin (林美如), an analyst at Polaris Securities Group (寶來證券), said Hon Hai was diversifying its business beyond motherboards, mostly through acquisition.

"It's part of Hon Hai's more ambitious plan to expand its product line to consumer electronics, digital home products in particular," she said.

To make inroads into the laptop computer market, Hon Hai recently bought an unknown number of shares in small local notebook computer company Chi Ho Computer Inc (志合電腦), Lin said. Now Hon Hai makes unbranded laptop computers for microchip giant Intel Corp, she said.

Hon Hai also acquired wireless equipment maker Ambit Microsystem Corp (國電) in November after buying Motorola Inc's Mexican handset factory in September and Finland's mobile-phone casing maker Eimo Oyj in May.

Its subsidiary Innolux Display Corp (群創光電) makes flat panels.

"Now Hon Hai is developing into a real power in the electronics sector. Definitely, it wants a piece of the promising digital home market," Lin said.

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