Foxconn Said to Target Wearables With New Startup Fund

January 8, 2014 Leave a comment

Foxconn Said to Target Wearables With New Startup Fund

Foxconn Technology Group, maker of Apple Inc. iPhones and iPads, is launching an investment fund to finance startups developing new kinds of wearable computers, according to two people familiar with the project.Syntrend Creative Park Co., a Foxconn unit, will administer the NT$200 million ($6.8 million) fund and select participants for a trial in the first quarter, the people said, asking not to be identified because the details aren’t public. Operations at the incubator, providing offices and advisory services for startups, will open by the end of next year to create wearable and connected technologies, the people said.

Foxconn is expanding beyond manufacturing devices for clients including Apple and Hewlett-Packard Co. as slowing sales and increased competition challenge founder Terry Gou’s target of 15 percent annual revenue growth. In June, the billionaire showed off a smartwatch the company is developing and in October it acquired licenses to offer fourth-generation wireless service in Taiwan.

Syntrend, headed by Terry Gou’s son, Gou Shou-cheng, will open its Taipei Information Park by the fourth quarter of next year, the people said. Foxconn in 2010 won a government contract to build and operate a 12-story complex that will host retail outlets and product showcases from local and international brands, which may include Microsoft Corp. and Google Inc.

Simon Hsing, a spokesman for Foxconn flagship Hon Hai Precision Industry Co., declined to comment.

Student Programs

Two floors of the building will be dedicated to the incubator, while startups chosen for the trial may be housed in temporary offices or at Foxconn facilities in Taipei City, the people said.

An App Up Your Sleeve

As many as 20 startups will be selected, with funding likely to be about NT$1 million each, the people said. Syntrend also plans to work with local and international universities to promote student programs and to sponsor startup competitions, they said.

While the focus will be on developing hardware, Syntrend may also support software startups such as mobile application developers that include wearable or connected device technologies, according to the people familiar with the plan.

Taipei-based Hon Hai posted a 0.8 percent drop in revenue for the January to November period, it said in an e-mail today, making it unlikely to meet Gou’s own long-term goal for annual revenue growth. Its stock has fallen 2.6 percent this year in Taipei, trailing a 9.5 percent advance in the benchmark Taiex index.

Game Consoles

In addition to assembling iPhones and iPads, Hon Hai makes computers for HP and Dell Inc., networking equipment for Cisco Systems Inc. and game consoles for Sony Corp. Once the sole assembler of iPhones, Hon Hai now competes with Taipei-based Pegatron Corp. for the Cupertino, California-based company’s phones and tablet computers.

As PC and smartphone sales growth slows, Foxconn is investing in software, cloud services and telecommunications providers to drive revenue. It also assembles Google’s digital eyeglasses in California and last month announced plans to invest $40 million in Pennsylvania to develop robotics and high-end component manufacturing.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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