Hon Hai buys into CDMA handset plant

Dec 29, 2003 Ι Industry In-Focus Ι Electronics and Computers Ι By Ken, CENS
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Taipei, Dec. 29, 2003 (CENS)--Hon Hai Group, Taiwan's largest manufacturing conglomerate in terms of revenue, recently acquired a Motorola-run CDMA (code division multiple access) handset factory in Mexico as part of its plan to venture into handset manufacturing.

Group chairman T.M. Kuo pointed out that through this acquisition his company could save at leas three years of time on wireless-business deployment and help speed up his company's move into this sector.

Recently, his company has doubled efforts in branching into handset manufacturing from personal-computer production and acquired in the second half this year Eimo Ojy of Finland, which specializes in handset cases, frames and parts, as well as the Motorola factory. In March next year, Hon Hai will complete merger with Acer Group's modem unit Ambit Microsystems Corp.

Kuo pointed out that the acquisition deal will help his company dominate Taiwan's CDMA-handset supply as all of the island's handset manufacturers are building phones compatible with the Europe-spearheaded GSM (global system for mobile communications) specification.

Institutional investors in Taiwan forecast Hon Hai's revenue from telecommunications equipment to sharply rise next year from this year's 26% of total group revenue, and its PC business to stay at 50%-55% of total revenue. They estimated the company to ship six million to eight million CDMA handsets and 10 million PHS (personal handyphone system) phones throughout next year.

In response to reports that Hon Hai would buy other domestic handset manufacturers to beef up its wireless R&D strength, Kuo said that his company's wireless R&D capability is strong enough to rival others'.

Kuo said his company would still grow at pace of NT$100 billion (US$2.9 billion at US$1:NT$34) next year. He set the goal of increasing revenue, capitalization and profit for next year. He said his company's earnings this year would be as hefty as last year's.

Foreign institutional investors estimated the company's after-tax earnings at NT$22.5 billion (US$661 million), or NT$8.94 per share, this year. They forecast the company to earn NT$29.2 billion (US$858 million), or NT$11.61 per share, next year.
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