Taipei, Feb. 8 (CNA) Hon Hai Precision Industry, the world's largest contract electronics maker, has decided to team up with Yulon Motor Co., one of the largest car makers in Taiwan, to set up a joint venture for car development.
Hon Hai, known as Foxconn in the global market, said Friday that it has signed an agreement with Yulon for the establishment of the vehicle development joint venture with a capital size of NT$15.58 billion (US$517 million).
According to Hon Hai, the new company will focus on car design and launch an open platform for car development.
For the development of the open platform, Hon Hai said the joint venture will involve a Yulon subsidiary, Hua-Chuang Automobile Information Technical Center Co. (HAITEC), and take advantage of Foxconn's electronics and information device design and manufacturing expertise to strengthen its car development.
The Taiwanese electronics manufacturing giant will invest NT$7.94 billion for a 51 percent stake in the joint venture, while Yulon will inject NT$7.63 billion in in-kind investment using its assets in the open platform for car development to hold the remaining 49 percent, Hon Hai said.
Industrial sources close to the deal said HAITEC has a workforce of 500-600 employees and ample resources in electric vehicle development, adding that the deal shows Hon Hai's determination to penetrate the electric car business.
It is possible that HAITEC will become one of Hon Hai's subsidiaries in the future, the sources said.
The Taiwanese company has shown its ambitions to transform from pure contract manufacturing to a company that integrates its capability in hardware and software development.
To broaden its business scope and improve its product portfolio, Hon Hai Chairman Liu Young-way (劉揚偉) said in an investor conference in November 2019 that the company had plans to enter the electric car, robot and digital medical care businesses.
The deal with Yulon is the second cooperation agreement announced by Hon Hai this year for auto development.
In January, it announced a plan to enter into a 50-50 joint venture with Italian-American car maker Fiat Chrysler to produce electric cars.
Both aspects of the proposed partnership with Fiat Chrysler -- the manufacture of electric cars and the entry into the Internet of Vehicles (IOV) business -- are aimed at tapping into the huge Chinese market initially and into other markets later, Hon Hai said.
The industrial resources said the joint venture with Yulong will focus on the Taiwan auto market.
In addition, FIH Mobile Ltd., another Hon Hai subsidiary, which is listed in Hong Kong, has set up a unit -- Mobile Drive Technology -- in a bid to integrate mobile communications technology with automotive electronics technology in a 5G era, the sources said.
Also, as part of Hon Hai's efforts to expand its product mix, it entered into a partnership with Japanese system-on-chip producer Socionext Inc. and American video management software developer Network Optix Inc. earlier this month to develop artificial intelligence-based solutions.