Hon Hai's affiliate to acquire Neosonic Tianjin

Taipei, July 8, 2005 (CENS)--Taiwan's Hon Hai Group, the world's largest maker of barebone PCs, connectors and game consoles, has decided to allow its affiliated Cheng Uei Precision Industry Co. (Foxlink) to acquire China-based Neosonic Energy Technology (Tianjin) Corp., a cell-phone battery supplier to Motorola.

Industry sources said all of Hon Hai's cell phone batteries will be supplied by Foxlink in the future, which will contribute additional annual revenue of over NT$10 billion (US$314.47 million at US$1: NT$31.8) to Foxlink.

Industry insiders said that Foxlink expressed interest in acquiring Neosonic Tianjin three years ago, but the project was delayed was Motorola was willing to release only cell-phone battery orders, not notebook PC battery orders.

Hon Hai chairman Terry Guo, however, finally decided to allow Foxlink to acquire Neosonic Tianjin. Foxlink's chairman T.C. Guo is Terry Guo's younger brother.

Hon Hai has been actively developing its cell-phone and related businesses through the group's holding arm Foxconn International Holdings Ltd. (FIH). Currently in the group, Chi Mei Communication Systems Inc. (CMCS, acquired by Hon Hai recently) is responsible for original design manufacturing (ODM) R&D and manufacturing, Foxconn Technology Co., Ltd. For cell-phone housing, Ambit Microsystems Corp. for wireless communication modules (such as Bluetooth 811.b module), and Hon Hai Precision Ind. Co. Ltd. For mold/die development and parts/peripheral supply. The group only lacks a battery supplier.

According to some institutional investors, Neosonic Tianjin's annual revenue is over NT$7 billion (US$220.82 million). If Hon Hai's annual cell-phone production volume reaches 50 million units, Foxlink is expected to rake in an additional annual revenue of over NT$10 billion (US$315.46 million). Many foreign investors have been buying Foxlink's shares, bringing the total foreign shareholding ratio in the company to a record high of 31.11%.

Foxlink is now a major supplier of batteries, connectors, cables, flexible circuit boards, and digital-camera modules to many big international cell-phone brands such as Nokia, Motorola and Sony Ericsson. The company's chairman T.C. Guo has been seeking to join the cell-phone assembly business.