Intel in Talks With Foxlink for Supplier Relationship

Taipei, July 19, 2010 (CENS)--To secure supply of connectors for CPU socket and avoid monopoly of supply by Hon Hai, Intel is talking with Foxlink for the establishment of a supplier relationship and may even buy into the latter, according to the Chinese-language Economic Daily News (EDN), sister publication of Taiwan Economic News (TEN).

The deal, if materialized, will mark a major engagement of Intel in Taiwan's tech industry, on one hand, and milestone in the development of Foxlink, on the other, which until now has confined its connector production to cellphone use, due to the intent of its chairman T.C. Gou to avoid business confrontation with his brother, Hon Hai's chairman Terry Guo.

The policy appears to begin wavering this year, however. On the one hand, major notebook PC makers have approached Foxlink for the supply of connectors, as they have become increasingly concerned about the threat deriving from the vigorous expansion of business scope by Hon Hai. On the other hand, in order to seek further growth, Foxlink has decided to diversify its business deployment, as evidenced by its cooperation with Apple in investing in sales channel, foray into the memory module market by buying into Power Quotient International (PQI), and decision to step into the realm of note PC connector.

Foxlink refused to comment on the reported deal with Intel, citing the legal obligation of confidentiality for any of its deal or technological cooperation with its clients.

Foxlink reportedly will pass orders for notebook PC connectors to Proconn, which it acquired last year, in order to minimize possible trouble.

Should major PC makers form a close supplier relationship with Foxlink, they may further pass orders for other products, including camera module, power supply, battery, and antenna, to Foxlink.

Industry insiders noted that in addition to the strong technology and mass production capability of Foxlink, another major consideration of Intel in choosing Foxlink as a new supplier is the expectation of fewer patent disputes with Hon Hai, due to the brotherhood between T.C Gou and Terry Guo.

Meanwhile, Intel has the track record of buying into its suppliers to foster the latter's development, such as subscription to Hon Hai's global depository receipts during the period when Hon Hai supplied Socket 7 connector to Intel.