Taiwan IT conglomerates to venture into auto-parts biz

Taipei, Dec. 9, 2004 (CENS)--Two leading information technology (IT) conglomerates in Taiwan have recently announced plans to tap the auto-parts business, including Mitac Group and Hon Hai Group.

Mitac will cooperate with Honda (Guangzhou) Motor Co. Ltd. In mainland China, a joint venture between Honda Motor Co. of Japan and Guangzhou Automobile Group Corp. of China; while Hon Hai has decided to enter the new field via acquisitions.

Industry sources said that the PC market has witnessed a sales slowdown in recent years, forcing IT hardware makers to diversify their businesses.

As its chairman Mathew Miao recognized the strong sales of auto parts several years ago, Mitac has been deploying related businesses in a low profile these years. Mitac's subsidiary, Mitac Precision Technology Corp., has recruited a group of professionals from the auto parts industry and is setting up an auto-parts production plant in Shunde, Guangdong Province, mainland China.

Mitac Precision has reportedly signed an agreement with Honda Guangzhou and will supply some auto parts to the automaker on an OE (original equipment) basis. Industry sources said that Mitac successfully joined Honda Guangzhou's supply chain in the second quarter this year.

Mitac Precision plans to set up a big and modern plant in Shunde, which will be installed with eight to 12 heavy-duty machines with a total capacity of 300,000 pressings per month.

Hon Hai, the world's largest maker of barebone PCs, connectors and game consoles, will also tap the auto-parts business as part of its 6C (computer, communication, and consumer electronics, channel, car, content) project.

A senior Hon Hai official said his company will first invest in several small- to medium-sized enterprises (SMEs) in Taiwan, especially those in the auto parts industry. The firm has also planned to set up an auto-parts production zone in Shanxi Province, mainland China as its first production base for auto parts. Hon Hai's magnesium-alloy business division has won the QS-9000 certification, becoming a qualified supplier in the international OE business.