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The move comes as Hon Hai is trying to diversify aggressively by
finding new revenue sources beyond contract assembly for the
likes of Apple Inc <AAPL.O>. Earlier this year it bought stakes
in a Taiwanese mobile network provider and a South Korean IT
services provider.
Hon Hai and Innolux, the world's No.3 flat-panel maker, are
currently buying equipment for the facility located in the
southern port city of Kaohsiung and which is expected to start
production in the second half of 2016, an Innolux representative
said on Thursday.
The plant, which will make LTPS (low-temperature polysilicon)
panels, predominantly for use in smartphones, was originally
built in 2008, but was idled due to financial constraints after
the 2008 global financial crisis.
The displays made at the plant will be shipped to China for
assembly in final products, despite China imposing a 5 percent
tariff on imported displays, said an industry source.
According to a statement from Innolux, the Hon Hai group is
investing in the LTPS panel-making plant to meet the demand of
an "exclusive" customer. Company officials declined to
elaborate.
It was not immediately clear how the firms would split the
investment and the plans are still awaiting final approval from
the boards of both companies, though Hon Hai will likely take a
proportionately larger stake. The Innolux representative said
the investment may take the form of a new joint-venture company.
A Hon Hai representative confirmed the plan. Hon Hai already
holds a 9 percent stake in Innolux via investment by its
subsidiary companies and founder Terry Gou.
(Additional reporting by J.R. Wu; Editing by Muralikumar
Anantharaman)
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