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Electronics Manufacturing Giant Hon Hai Consolidates to Strengthen Internet Biz

Feb 22, 2016 | By CENS

According to the supply chains of the Hon Hai-Foxconn Technology Group, recognized as Taiwan's biggest electronics manufacturing conglomerate by revenue, the group is consolidating its affiliates to beef up its operations in Internet-based businesses, including cloud computing, Internet of Things (IoT) and smart applications.

The suppliers point out that the group has begun combining the server-equipment business unit under a sub group coded F with the networking and telecommunication unit to form a G-dubbed sub group. The entity will be headed by the group's vice president, F.M. Lu, also the incumbent chairman of the group's Asia Pacific Telecom Co., Ltd.

They say Hon Hai plans to scale down the number of its affiliates to 11 from 12 through the consolidation plan, on which the group has declined to comment.

People familiar with the consolidation plan say the restructuring has been instructed by Group Chairman Terry Guo personally. They point out that after the consolidation, Lu, originally in charge of the group's 4G communication and network-connectivity business, will have at disposal more resources to work on the group's IoT project.

H.F. Wu, another group vice president in charge of the server business, will reportedly work with Lu to build the IoT business after the consolidation.

Industry executives feel that the consolidation will help pave the way for the group's turnaround and help to contribute considerably to the future development of the new affiliate.

They say the consolidation is in agreement with Lu's recent comment that the group is vigorously developing presence in the IoT industry. To achieve such goal, the company has been strengthening its cloud-computing, Internet, and smart-application businesses.

The group's smart-application business taps the technological advantages and reputation of the group as the world's No.1 maker of smartphones and tablet computers. Last year at a global seminar on the Internet held in Beijing, Guo said that smart applications should be extended to IoT and smart homes from apps on smartphones and tablet computers, which would enable widening of range of smart applications.

Industry executives point out that the restructuring shows the group is capable of change to ever-changing markets in spite of its gigantic size, with revenue of some NT$4.8 trillion (US$145.45 billion) in 2015, a feature typically not easily found in massive corporations. 

In 2013, the group launched its first consolidation by reducing the number of its affiliates to 12 from 13 in response to market shift.


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