IT + CE
Challenges looming for Foxconn IIoT arm after going public
Ninelu Tu, Taipei; Willis Ke, DIGITIMES

Amid speculations on reasons behind the recent speedy regulatory approval of Foxconn Industrial Internet's (FII) initial public offering (IPO) in China, it remains unclear to outsiders what role FII wil play in the Foxconn Group's industrial IoT (IIoT) platform.

In a short statement issued earlier, Foxcoon simply indicated that the FII's IPO move is mainly designed to help accelerate its transformation into an IIoT enterprise group driven by big data, AI (artificial intelligence) and robot applications. Nevertheless, what business operations FII will undertake after going public remains quite blurry.

Public information shows that FII now directly and indirectly holds stakes in as many as 60 subsidiaries of Foxconn, including Henan Yuzhan Precision Technology, Zengzhou Futaihua Precision Electronics, and ShanXi Yuding Precision Technology, mostly engaged in high-precision metal components and high precision, high molecular polymer components. In addition, it has also incorporated some business operations originally associated with network communications and datacenters. Accordingly, some observers think FII will remain a manufacturing-centric unit of Foxconn.

Political maneuver?

But if FII is simply a manufacturing entity, it seems unreasonable for China Securities Regulatory Commission (CSRC) to issue a green light to FII's IPO in only 36 days after the application was filed, as traditional manufacturing industries are no longer targeted by China government for further development. Apparently, FII must have zeroed in on industrial and market segments that China is eager to develop with policy support.

The quick green light could be interpreted as a political maneuver by China to win over Taiwan businesses, but it remains uncertain whether China would also quickly approve other Taiwan applicants' IPO bids. And of course, the big scale of FII's operations may have been a favorable factor.

Anothe likely factor is that FII's direction is in line with China's policies set to steer the nation's industrial development, and China sees FII's IPO as a part of its grand move to tightly integrate IIoT, big data, AI and real economy of the country.

But how to keep weaving a profitable business model appealing to investors by leveraging policy advantages will be a pressing task for FII after going public.

In realizing the development of IIoT applications in the absence of successful business models for the moment, how the Foxcoon Group will do to integrate its existing internal and external resources or further enhance its businesses through acquisitions will be a big challenge for Foxconn.

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