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December 11. 2013 10:20PM

Foxconn to fund startups to develop wearable technology?


Workers walk on campus at the Foxconn Longhua plant in Shenzhen, China, on April 27, 2012. (LiPo Ching/San Jose Mercury News/MCT)

TAIPEI, Taiwan — Foxconn Technology Group, maker of Apple iPhones and iPads, is launching an investment fund to finance startups developing new kinds of wearable computers, according to two people familiar with the project.

Syntrend Creative Park Co., a Foxconn unit, will administer the NT$200 million ($6.8 million) fund and select participants for a trial in the first quarter, the people said, asking not to be identified because the details aren’t public. Operations at the incubator, providing offices and advisory services for startups, will open by the end of next year to create wearable and connected technologies, the people said.

Foxconn is expanding beyond manufacturing devices for clients including Apple and Hewlett-Packard Co. as slowing sales and increased competition challenge founder Terry Gou’s target of 15 percent annual revenue growth. In June, the billionaire showed off a smartwatch the company is developing and in October it acquired licenses to offer fourth-generation wireless service in Taiwan.

Syntrend, headed by Terry Gou’s son, Gou Shou-cheng, will open its Taipei Information Park by the fourth quarter of next year, the people said. Foxconn in 2010 won a government contract to build and operate a 12-story complex that will host retail outlets and product showcases from local and international brands, which may include Microsoft Corp. and Google Inc.

Simon Hsing, a spokesman for Foxconn flagship Hon Hai Precision Industry Co., declined to comment.

Two floors of the building will be dedicated to the incubator, while startups chosen for the trial may be housed in temporary offices or at Foxconn facilities in Taipei City, the people said.

As many as 20 startups will be selected, with funding likely to be about NT$1 million each, the people said. Syntrend also plans to work with local and international universities to promote student programs and to sponsor startup competitions, they said.

While the focus will be on developing hardware, Syntrend may also support software startups such as mobile application developers that include wearable or connected device technologies, according to the people familiar with the plan.

Taipei-based Hon Hai posted a 0.8 percent drop in revenue for the January to November period, it said in an email Wednesday, making it unlikely to meet Gou’s own long-term goal for annual revenue growth. Its stock has fallen 2.6 percent this year in Taipei, trailing a 9.5 percent advance in the benchmark Taiex index.

In addition to assembling iPhones and iPads, Hon Hai makes computers for HP and Dell Inc., networking equipment for Cisco Systems Inc. and game consoles for Sony Corp. Once the sole assembler of iPhones, Hon Hai now competes with Taipei-based Pegatron Corp. for the Cupertino, Calif.-based company’s phones and tablet computers.

As PC and smartphone sales growth slows, Foxconn is investing in software, cloud services and telecommunications providers to drive revenue. It also assembles Google’s digital eyeglasses in California and last month announced plans to invest $40 million in Pennsylvania to develop robotics and high- end component manufacturing.