Foxconn branches out beyond Apple in troubled solar industry
Hon Hai is seeking to cut its reliance on Apple, which accounted for an estimated 60 per cent of Hon Hai revenue that exceeded US$100 billion last year.
Foxconn Technology Group, best known for assembling Apple’s iPhones, will decide by year-end whether to branch off into unconventional new territory: making solar panels in China.
It is an industry plagued by overcapacity that outstrips demand, and panel prices have tumbled by more than two-thirds in the past two years. Yet some analysts say Foxconn may end up timing it right, ready to make a move just as the sector shows some signs of stabilising.
Foxconn, the trading name of Taiwan’s Hon Hai Precision Industry, has been testing the market for two years but has revealed little about its Fox Energy solar unit. The company has one small solar panel factory in eastern China, and has also held talks with the southwestern province of Guangxi about building solar power plants.
“We aim to make a decision about whether or not we will enter this market by the end of this year,” Foxconn spokesman Simon Hsing told Reuters. “We believe renewable energy is a potentially good trend. It looks like a good project. This is an industry we probably need to know more about.”
Hon Hai has not disclosed its investment in solar, which analysts reckon is small, but with US$22.7 billion in cash on the balance sheet as of March, it has the wherewithal to expand.
The company is seeking to cut its reliance on Apple, which accounted for an estimated 60 per cent of Hon Hai revenue that exceeded US$100 billion last year. It reported a second-quarter net profit of TUS$16.98 billion (US$567.15 million) on Tuesday, up 35 per cent from a year earlier and exceeding analysts’ expectations.