Foxconn Unit to Buy Router-Maker Belkin for $866 Million

A unit of Taiwan manufacturing giant Hon Hai Precision Industry Co. Ltd., better known by its trade name Foxconn, has made a bid to buy U.S. router-maker Belkin International Inc., in a move to diversify into branded consumer goods.

FIT Hon Teng Ltd., a manufacturer of connectors, cables and antennas, is spending $866 million to acquire Belkin and broaden its consumer-facing operations, pending regulatory approval, FIT said Tuesday in a filing to the Hong Kong Stock Exchange.

The deal will provide FIT with channel relationships, retail presence and direct-to-consumer opportunities. The company had been underdeveloped within the Foxconn’s manufacturing division, the statement said.

Belkin, which also makes wireless chargers, keyboards and smart home systems, is set to also complement FIT’s research and development resources with its in-house design capability and over 700 patents, the statement added.

Foxconn is the world’s largest contract manufacturer and a major assembler of Apple Inc.’s products, including iPhones. It’s the largest private employer in China with nearly 1 million workers, according to a report by the Nikkei Asian Review.

The Foxconn group has in recent years sought to expand beyond contract production to capture a greater share of the lucrative branded-goods business. In 2016, Foxconn bought Japan’s Sharp Corp. for $3.8 billion and is reportedly eyeing Toshiba Corp.’s ailing personal computer division.

The FIT-Belkin deal is expected to face fewer headwinds from U.S. regulators than other recent attempts to purchase U.S. technology companies, as analysts said Belkin’s business doesn’t involve national security concerns and Foxconn has promised to make large investments in the U.S.

“I would be surprised” if the deal doesn’t go through as Belkin is a consumer commodities maker, said Christopher Balding a professor at Peking University’s HSBC School of Business in Shenzhen.

In a bid to safeguard U.S. technological intellectual property, Washington has killed off a slew of acquisition deals from Chinese firms, including a $580 million sale of Xcerra, a Massachusetts-based semiconductor-maker, to an investment group backed by a Chinese government-controlled fund.

However this is not a “kill-all” by the Trump administration against Chinese buying in the U.S., and acquisitions will be judged on a case-by-case basis, Balding told Caixin.

In July, Foxconn vowed to invest $10 billion in a Wisconsin factory that would employ thousands of workers to make screens for devices.

Contact reporter Jason Tan (jasontan@caixin.com)