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Foxconn becomes 4G spectrum owner

iPhone's manufacturer invests $312m in LTE licences in Taiwan as it expands its business model

By CAROLINE GABRIEL

Published: 30 October, 2013

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Hon Hai (aka Foxconn), best known as the manufacturer of electronics products such as the iPhone, has been expanding its business model in recent months - into its own-branded devices, new manufacturing lines, and now into spectrum.

The company was one of six which won spectrum in Taiwan's LTE auction, a long and hotly contested process in which the fierce bidding raised concerns that prices were getting out of control. In the end, the total raised was TWD118.65bn ($4bn), about 3.5 times the reserve amount set by the regulator, the NCC.


Hon Hai bid TWD9.18bn ($312m), via a subsidiary called Ambit Microsystems, for two licences in the 700MHz and 900MHz bands. It is unclear how it will use the frequencies, but one of its EVPs, Lu Fang-ming, told a conference in Taipei this week that the company hopes to provide consumers with communication systems and innovative services on both fixed and wireless links in future.

It could launch mobile services to support its plans to develop own-branded devices and accessories. In theory it could emulate the practice of some Japanese consumer electronics suppliers to offer mobile gadgets with integrated wireless plans in order to establish itself as more than a contract manufacturer. It has already formed an alliance with Mozilla to cooperate on devices running Firefox Mobile, which could give Foxconn the chance to create an own-branded range.

The Taiwanese firm is said to be recruiting about 3,000 software staff to help support the platform, making a bet on Firefox that could give it a new level of control and influence in the device ecosystem. That, in turn, could set a new pattern in the market - rather like that in home equipment like set-top boxes - where the Taiwanese ecosystem and the software platforms collaborate directly, reducing the power of the big brand OEMs.

Foxconn is now understood to be working on at least five device prototypes running Firefox, which could be sold under its own brand or those of operators or vendors. The new software staff would have expertise in HTML5, cloud computing and OSs, saidFoxconn last week.

Back at the auction, there were five other winners. Four were existing cellcos - Chunghwa Telecom, Taiwan Mobile, Far EasTone and Asia Pacific Telecom. The final winner was a firm backed by Ting Hsin International Group, the Chinese food processing company. The only unsuccessful bidder was Shinkong Group, while the island state's two smallest cellcos did not participate.

The NCC was selling a total of 12 blocks totalling 270MHz of spectrum in the 700MHz, 900MHz and 1.8GHz bands, for LTE. Bidding was highest for the 1.8GHz band and reached more than eight times the reserve price.

The exact frequencies secured by each player, and the breakdown of fees, will be announced later.

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