Taiwan-based manufacturing giant Hon Hai Precision Industry Co. said on Monday that it plans to invest NT$20 billion (US$719 million) in its “3 plus 3” initiative next year as part of efforts to diversify its product portfolio.
The initiative refers to the three emerging industries — electric vehicles, robots and digital healthcare — that are being developed through the application of artificial intelligence, semiconductors and communications technologies.
A financial executive of iPhone assembler Hon Hai, also known as Foxconn on the global market, said capital expenditure for the “3 plus 3” initiative will hit about NT$10 billion this year and investments are expected to double next year.
In recent years, Hon Hai has promoted the initiative to diversify from its contract manufacturing business into hardware and software integration. The development of electric vehicles is central to the initiative, as is building an EV supply chain.
Hon Hai Chairman Liu Young-way (???) has said gadgets based on the light detection and ranging (LiDar) technology, which is used in electric vehicle production, is scheduled to be mass produced in the second half of next year.
On the Hon Hai Tech Day on Oct. 18, the company demonstrated for the first time its LiDar technology and the development of imaging sensor used in cameras for self-driving in EVs.
On Friday, Hon Hai said in an announcement posted on the Taiwan Stock Exchange (TWSE), where shares of the company are traded, that it has invested US$125 million to enforce its EV efforts through subsidiary Foxconn EV Technology Inc.
In addition, the company said in the announcement that it has also poured NT$3.17 billion in subsidiary Hon Young Semiconductor Corp. to facilitate the company’s semiconductor development.
Also on the Tech Day event, Hon Hai unveiled three self-developed EV models — the Model C sports utility vehicle, the flagship Model E passenger car, and the Model T electric bus — through a joint venture, Foxtron Vehicle Technologies Co., with Taiwan carmaker Yulon Group.
Foxtron is promoting a MIH Open Platform for EV development as Hon Hai aims to build the platform as the “Android of the electric car industry” as part of its efforts to penetrate the global electric vehicle market.
According to Hon Hai, SUVs based on the Model C prototype will hit the market in 2023 at the earliest, and passenger cars based on the Model E, which was jointly developed with Italian car designer Pininfarina, will follow.
Liu has said the EV business is expected to generate NT$1 trillion in sales for the group in five years with sales growth momentum forecast to pick up in 2023.
When asked when the EV business will start to rake in profit, Liu said as long as annual production tops 120,000 to 150,000 units, Hon Hai will see profit coming in.
Hon Hai has extended the reach of its EV business overseas. As part of its efforts to develop electric vehicles overseas, Liu said Hon Hai will expand its production in a plant in Mexico in the first half of next year, while it is also planning to invest in EV-related cloud and software technologies in the Middle East.
In the third quarter of this year, Hon Hai posted NT$36.98 billion in net profit, up 24 percent from the NT$29.78 billion it posted in the second quarter with its gross margin — the difference between revenue and the cost of goods sold — rising by 0.27 percentage points from a quarter earlier year earlier to 6.3 percent in the quarter.
Liu said Hon Hai’s gross margin could hit 7 percent in 2022 as the company transitions from a pure contract hardware manufacturer into an entity that integrates its hardware and software strength in the digital era.
Source: Focus Taiwan News Channel