Hon Hai moves to dominate solar power

Hon Hai Precision has said that it will be joining other Taiwanese companies and jumping on the solar-energy market bandwagon.

The company will splash out on a 36.766 percent share in E-Ton Solar, which will set it back around $134 million (NT$4.04 billion). For its buck it will get a subscription to private share placement and become the company’s largest shareholder. It will also reportedly reshuffle and take over the management of the company.

However, Hon Hai hasn’t stopped with just one investment. In a bid to become the leader in this industry it has also started a beautiful relationship in Jiangxi Province for solar-energy materials with China`s Yingli Group and inroads into solar-energy module and system.

According to those in the know Hon Hai may also look to increase its solar dominance by  taking over a solar-energy silicon wafer plant and thin-film solar-energy plant. The nod was to Auria Solar as the target for the takeover.

However, all this buying lark may not be best for business depending on region. According to DigiTimes, although vendors and Taiwan-based ODMs have set up or will set up bases in the western region or other inland locations in China, upstream component makers are not really willing to follow suit.

This is because wage rates for inland locations are 15-20 percent lower than in coastal areas and clients are also asking for a proportional cut in component quotes, meaning the wage savings, plus the factory costs leave room for poorer profits.

The sources pointed out that the average wage in China’s coastal areas recently rose quickly from $146 (CNY960) to above $205 (CNY1,100) because Foxconn had been forced to raise its employee salaries.

However they pointed out that the company had been moving its major production lines into western China, leaving small players to suffer from the rising labour costs and forcing some component makers to follow suit and invest in the west.