Foxconn Electronics (the registered trade name of Hon Hai Precision Industry) has strengthened its broadband equipment business by taking up a significant stake in CyberTAN Technology. The deal is expected to help Foxconn further expand its ties with two of its major clients, Cisco Systems and Sony, according to market sources.
In a November 10 filing with the Taiwan Stock Exchange (TSE), Foxconn said that it bought 30.914 million shares, or a 11.56% stake, in CyberTAN Technology for NT$357.06 million (US$10.7 million), or NT$11.55 (US$0.34) a share.
Edmund Ding, spokesperson of Foxconn, said that the investment is for long-term investment purposes. The investment has made Foxcoon the second largest shareholder of CyberTAN, trailing the company’s chairman Thomas Chen, who holds a 16.06% stake.
CyberTAN shares had closed down by its daily limit for three consecutive days to finish at NT$11.55 on the TSE on November 9, following a local media report on November 7 that the company was undergoing investigation for alleged capital embezzlement. Upon Foxconn’s announcement, however, the stock went limit up on November 10 to close at NT$12.35.
Lee Hu-ching, a spokesperson of CyberTAN, stated that the company welcomes Foxconn’s investment as it will help stabilize CyberTAN’s operations and that there is room for further cooperation between the two companies.
Market sources pointed out that Foxconn’s deal will help CyberTAN retain two of its major clients, Linksys (a division of Cisco Systems) and Sony, and boost confidence in the company, allowing it to ship goods to the two customers as scheduled. Cisco and Sony are likely to be impressed by Foxconn’s move and will be willing to strengthen their cooperation with Foxconn, the sources indicated.
More importantly, the purchase of the 11.56% stake may pave the way for Foxconn to completely take up CyberTAN in the future as CyberTAN’s broadband technology and customers can complement Foxconn’s network equipment business, the sources noted. While CyberTAN makes WLAN modules for Sony’s PSP consoles, Foxconn manufactures the consoles for the Japanese vendor, the sources noted.
Article translated by Steve Shen and edited by Eric Mah
