Hon Hai, a  major assembler of Apple’s products, is still struggling to grow its gigantic manufacturing empire. To boost the valuation of its operations, the company has been spining off  its various component operations.

Its latest spin-off: a semiconductor unit that packages and tests wireless chips used in iPhones and other mobile gadgets.

ShunShin Technology, which competes with global chip assembly and tesingt companies including Advanced Semiconductor Engineering, is raising $50 million from an initial public offering in Taiwan and shares will debut on Monday.

ShunSin’s top two customers account for more than half of the company’s revenue. To reduce the risk of customer and market concentration, ShunSin Chairman Frank Hsu said the company will expand into new markets including cloud-computing, biotechnology and the automobile sector where it can cooperate with its parent Hon Hai.

The spinoff helps give investors a glimpse into Hon Hai’s  mysterious and complicated business structure.

Hon Hai has made its name in the manufacturing industry as it assembles the majority of the world’s consumer electronics ranging from Apple’s iPhones, iPads, Sony’s PlayStation game consoles to Sharp’s televisions. But the company also makes a bunch of sophisticated high-technology components used in automobiles and automated teller machines.

In the past two years, Hon Hai has successfully spun off several operations including industrial motherboard maker Ennoconn and a casing and mechanical component unit Eson Precision.

While share of all of its spinoffs closed higher on their first day of trading, Advanced Optoelectronic, a light-emitting diode component unit that listed in October,  has traded below its initial public offering price..

Advanced Optoelectronic’s shares closed 0.4% higher at NT$54.50 on Wednesday, compared to its IPO price NT$72 due to an oversupply in the LED market, said Capital Securities analyst Diana Wu.

Analysts say a spinoff doesn’t guarantee a good stock valuation, but it could help facilitate Hon Hai’s succession plan when its founder and chairman Terry Gou retires.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved