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Hon Hai eyes markets in Mexico, Indonesia

TAIPEI, Taiwan -- With a five-year contract recently signed with BlackBerry, Hon Hai Precision Industry (鴻海精密) is expected to build more budget smartphones for emerging markets in Mexico and Indonesia.

Foreign news wires on Friday cited BlackBerry's statement that Hon Hai Precision Industry, better known as Foxconn outside Taiwan, will make products for BlackBerry at plants in Indonesia and Mexico.

BlackBerry will own all of its intellectual property and handle quality assurance through Hon Hai Precision, the world's largest contract electronics manufacturer and still the chief manufacturer of Apple's latest iPhones and iPads. The deal lets BlackBerry offload some of the costs of its unprofitable manufacturing operations, helping it focus on corporate software and service.

After years of losing market shares to Apple and Google Inc.'s Android, BlackBerry is trying to make a comeback by zeroing in on business customers. “The Foxconn deal is also more practical now that BlackBerry is a shadow of its former self,” Bloomberg cited an analyst at Societe Generale in London.

Prior to BlackBerry, Hon Hai had announced partnership with InFocus and launched an InFocus brand smartphone in China, the first of many planned InFocus-brand products.

Also in June, Hon Hai Precision announced its plan to expand a recruitment program by hiring as many as 3,000 workers to support the development of new devices based on Mozilla's Firefox operating system.

While Apple is looking to Pegatron (和碩科技) to assemble its budget smartphone models, Hon Hai Precision is continuing to diversify its offerings beyond the iPhone and other Apple products.

Hon Hai received 79 percent of Apple's iPhone orders in 2013, with the remaining 21 percent allocated to rival Taiwanese contractor Pegatron, according to the Deutsche Bank's estimates.

Hon Hai Precision to be Sole Supplier of 4.8 Inch iPhone

Hon Hai's share of the iPhone business will fall to 74 percent in 2014, however, compared with a 23 percent share for Pegatron and the remaining 3 percent share for a new entrant, Taiwan-based Wistron (緯創), the bank predicted.

For iPad assembly orders, Hon Hai's current 69 percent share is expected to drop to 63 percent next year as another new entrant, Taiwan's Compal Electronics (金寶電子), gets a 7-percent share, according to the bank.

Pegatron's 31-percent share of iPad orders will hold at about 30 percent in 2014, the bank said.

Nevertheless, Hon Hai Precision and Apple has taken their partnership to new depths. Hon Hai Precision Chairman Terry Gou (郭台銘) has recently announced robots and research-related investment plans in Arizona and Pennsylvania, a move believed to be responsible for building the bulk of Apple's products.

Foxconn Technology Group in China will be the sole assembler of Apple's next iPhone model, helping its total iPhone shipments grow by 13 percent in 2014, according to Deutsche Bank.

Exclusive production of the new iPhone, expected to have a 4.8-inch display and be launched in the third quarter of 2014, will help Hon Hai increase its total iPhone shipments, including the iPhone 5S and 5C, by 13 percent next year to 140 million units despite Apple's multiple-supplier strategy, the bank said.

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