TrendForce: CMI’s Innovative Atmosphere to Facilitate Foxconn (HON HAI) “Eyeball Project” Formation

TrendForce’s panel research division, WitsView, indicates that CHI MEI Corporation has resigned its board nomination on May 15, during board meeting, officially to take effect on June 28th, and announced that it will continue to support the operation team led by Chairman Hsing-Chien Tuan by keeping the promise of participation in capital increase. CHI MEI Corporation currently holds 17% of CMI’s total shares, greater than the HON HAI’s 12%. Recently, the Taiwanese government has increased the cap of China’s investment in Taiwan high technology industry; whether or not CHI MEI will transfer its holdings to Chinese investors has drawn significant attention. If the market rumor turns out to be true, HON HAI will have a chance to become the largest share holder of CMI which will further solidify its actual operation rights.

As pointed out by market information sources, CMI reorganization will take place this month, and sales organization will be modified from the original customer-focused operation structure to the business-focused unit, indicating CMI’s resolution to adjust its operating strategies.

WitsView indicates that the strategic layout of HON HAI based on the “Eyeball Project” has been gradually forming. Regardless of capital operation or customer structure adjustment, the two most crucial factors of the formation of “Eyeball Project” are technology and R&D talents. The purpose of HON HAI acquiring Sharp shares is to gain access to the advantages of large-sized panel production technologies such as UV2A and Oxide. Due to cultural and language barriers, it will take some time for HON HAI to have total control over G10, yet the final piece of the puzzle of Eyeball Project is within reach. However, by relying on Sharp’s existing G10 production capacity plus a portion of original production line of Innolux, HON HAI will still be facing a rather significant challenge to accomplish Terry Gou’s “Eyeball Project.” Therefore, being able to take one step further in terms of control over the operation right of CMI, HON HAI will be able to enhance the bargaining power during negotiation with Sharp for implementation of effective cross-enterprise sales integration based on CMI’s existing R&D manpower and relevant resources, in order to accelerate the Eyeball Project. By that time the competitiveness of CMI and Sharp will be able to achieve a compounded synergy. With tight cooperation with Sony, Panasonic and Apple, plus the provisioning of HON HAI Group affiliated retail channels, HON HAI’s complete strategic layout from upstream components and parts all the way to the end channels can be established.