Yulon Motor Co (裕隆汽車) and Hon Hai Precision Industry Co (鴻海精密) have entered a partnership to develop an automobile-related business, the two companies announced on Friday.
Yulon Group (裕隆集團) affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai would hold 49 percent and 51 percent ownership respectively in the joint venture, the companies said in a statement.
Hua-Chuang would invest NT$7.632 billion (US$253.33 million) in assets and technologies in the business, while Hon Hai invests NT$7.944 billion in cash, they said.
The parties would negotiate and sign a formal agreement and set up a temporary office to launch the project, the companies said.
The companies said they hope to leverage their advantages in various industries to develop the business and bring innovation to the auto industry.
Hon Hai would be responsible for information and communications technology development, and supply chain management, while Hua-Chuang would bring its automobile research and engineering capability, they added.
The companies did not specify a time frame for the establishment of the business.
The cooperation marks an opportunity for Yulon to reboot the money-losing Hua-Chuang — which mainly provides automobile engines, chassis, electronics and other critical components to the group — and has started a sweeping restructuring after posting net losses of NT$3.89 billion in the first three quarters of last year.
Hon Hai, the major assembler of Apple Inc’s iPhones, has continued development in the electric vehicle (EV) sector since announcing last year its targets for three strategic industries — EV, digital health and robotics — as the company is looking to diversify from its core business of electronics manufacturing.
The cooperation with Yulon comes after the company on Jan. 16 said that it planned to sign an agreement with Fiat Chrysler Automobiles NV to form a joint venture that would tap into the EV industry.
In light of the potential business opportunity in EVs, the companies said they plan to collaborate with more supply chain firms to develop the automobile-related business.
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