Following the acquisition of Japanese Sharp , the "Tianzi No. 1 OEM Factory" Foxconn has made new moves! On March 27, Hongteng Precision Technology (06088)$, a Hong Kong listed subsidiary of Foxconn, issued an announcement stating that it had signed a merger and acquisition agreement with Belkin International (hereinafter referred to as: Belkin ), and Hongteng Precision Technology spent US$866 million to acquire Belkin by a merger.
After the completion of this merger, Hongteng Precision Technology plans to integrate Belkin's existing Linksys and Wemo brand businesses, Belkin and its own smart home related assets, and establish a new smart home business department to further exert synergy effects.
Who is Hongteng Precision?
Compared with the famous names of " Hon Hai " and "Foxconn", people seem to know very little about Hongteng Precision Technology.
information shows that Hongteng Precision Technology Co., Ltd. is registered in the Cayman Islands, and the ultimate holding company is Hon Hai Precision Industrial Co., Ltd. (Hong Hai), and the direct holding company is Foxconn (Far East) Co., Ltd. (Foxconn Hong Kong), a wholly-owned subsidiary of Hon Hai.
Hongteng Precision Technology was listed in Hong Kong in July 2017. It is the fourth subsidiary of Hon Hai listed in Hong Kong after the mobile phone OEM factory Fuzhikang, Yunzhihui Technology, which develops intelligent factory systems, and Xunzhihai, the security control equipment manufacturer.
public information shows that Hongteng Precision Technology was formerly the network connection product business group (NWInG) under Hon Hai. It was independent from Hon Hai in July 2013 and was registered as Hongteng Precision Technology. Its main business is the manufacturing, sales and services of connectors, cabinets, heat dissipation modules, wired and wireless communication products, optical products, power supply modules and accessories used in information technology, communication and automation equipment, precision molds, automotive and consumer electronics industries.
Who is Belkin?
Foxconn promises to build a factory in the United States
Compared with Hongteng Precision, Apple powder may be more familiar with Belkin. Belkin was founded in Hawthorne, California, USA in 1983. It is a well-known computer and digital peripheral manufacturer. Its affiliated brands include Linksys and Wemo. Among them, Linksys is a routing/network device brand acquired by Belkin from Cisco in 2013, and Wemo is used for smart home products such as webcams.
It is widely known as Apple accessories. For example, after the release of iPhone 8/X, Belkin's wireless charging pad was launched on the official website.
Financial data shows that Belkin achieved sales of US$789 million and US$754 million in the two fiscal years ended September 30, 2017 and October 1, 2016 respectively. Among them, according to the generally recognized accounting standards in the United States, as of September 30, 2017, Belkin's audited net asset value was approximately US$57 million.
Hongteng Precision Technology stated that after the merger is completed, Belkin, its Belkin, Linksys, Wemo, Phyn and other brands will continue to operate as a subsidiary of Hongteng Precision Technology under the leadership of its CEO and founder Chet Pipkin and its team. Chet Pipkin is expected to join Hongteng Precision Technology's operation team.
analysts believe that this is a sign that Foxconn continues to move from behind the scenes to the front and weakens Apple's OEM image, because it has mastered three consumer-grade brands at the same time. Although the transaction of
still needs to be approved by the US Foreign Trade Trading Commission. However, analysis generally believes that there should be no big problem. After all, the risk is completely incomparable to Broadcom's acquisition of Qualcomm , and Foxconn has promised Trump that it will invest a $10 billion factory in Wisconsin.
acquisition may be intended for smart home
Hongteng Precision Technology stated that the acquisition of Belkin is mainly based on three factors: strong sales channels and globally recognized brands; business growth potential; merger synergy; value generated by restrictive contracts with Chet Pipkin.
Among them, in the expected synergy effect, the integration and layout of smart homes are the top priority.
Chet Pipkin, CEO and founder of Belkin, USA, said that the combination of Hongteng Precision Technology and Belkin will accelerate the realization of our vision of making people's lives better, more convenient and more fulfilling through technology.
"Belkin and Hongteng Precision Technology have excellent cooperation advantages. Hongteng Precision Technology's world-class production strength can strengthen Belkin's operating efficiency and competitiveness." Lu Songqing, chairman and CEO of
Hongteng Precision Technology, said, "Combining the brand of Belkin in the high-end consumer market in the United States is an exciting thing for us." By combining Belkin's leading market customer solutions, it is expected that the product portfolio of both parties in high-end technology products can be strengthened, while accelerating the layout of the emerging smart home market.
Hongteng Precision Technology's intention is very clear. With the help of Belkin's R&D strength and the sales channels of consumer electronics products , it will further lay out the peripheral products of high-end consumer electronics products and the smart home market. While achieving a great leap forward in R&D and manufacturing, we will work together to expand our territory in the United States and global markets.
99 cores build Foxconn’s global territory
In fact, the merger and acquisition of Belkin is by no means an isolated incident, which is closely related to Foxconn’s strategic idea of opening up and empowering to build a “backbone economy”.
In mid-2017, in a report of 226 pages, Zhang Bokai, head of the Greater China Science and Technology Industry Research Team of Macquarie Securities, predicted that Hon Hai/Foxconn will become an integrator of the future world (Integratorfortomorrowsworld).
Zhang Bokai pointed out in his research report that Hon Hai’s current nine core businesses are new and old, namely mobile phone assembly, PC and server, TV and panel, as well as game consoles, network equipment, connectors, channels and e-commerce, medical biotechnology, electric vehicles, robots and drones.
Macquarie Securities believes that although Foxconn's mobile phone assembly business currently accounts for about half of its revenue, the proportion is still the highest, while channel and e-commerce and medical biotechnology account for less than 1% of Hon Hai's revenue at this stage, and electric vehicles, robots and drones are still in its infancy.
However, Zhang Bokai attaches great importance to it. He believes that electric vehicles, robots, etc. are the major trends in the world and will become Hon Hai's future profitable tools.
Research report released by Macquarie Securities pointed out that in the face of the evolution of the technology market, Hon Hai has four major advantages:
1. As a professional electronics foundry, Hon Hai masters terminal devices.
2, Hon Hai enters telecommunications equipment and components, as well as telecommunications and cable TV operators.
3. Hon Hai has long invested in new technologies such as the Internet of Things and facial recognition, and upgrading the device to an intelligent device is easy.
4. Sharp opens the brand door for Hon Hai, helps Hon Hai contact end consumers, and accumulates experience in brand management and marketing.
Zhang Bokai believes that based on the above four major advantages, Hon Hai will quickly open four new markets such as smart home , smart cars, smart factories, and smart medical services in the future.
This has been reflected in Sharp. On March 7, 2018, Sharp announced the "Herbyte Strategy Matrix", which integrates fragmented home appliances and home products into a collaborative ecological system to create a smart home Internet ecosystem based on three basic needs: clean air, clean water, and clean food, as well as high-level needs for beautiful faces and smart brains.
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