Google to invest in Hon Hai unit amid Metaverse enthusiasm

Taipei, Jan. 5 (CNA) U.S. tech giant Google Inc. has agreed to acquire a stake in Ennoconn Corp., an industrial computer subsidiary of Hon Hai Precision Industry Co., at a time when the global tech sector has set its sights on opportunities from the Metaverse concept.

In a statement released Tuesday, Ennoconn said a board meeting has decided to launch a private placement in which Google will participate and take a 4.6 percent stake in the subsidiary, the third largest of any institutional investor.

According to analysts, Ennoconn’s product line of servers and gadgets used in 5G applications, data centers and the Internet of Things sets it up well for the so-called “Metaverse” concept, that has been talked up by Meta (Facebook) CEO Mark Zuckerberg since July.

Hon Hai, also known as Foxconn internationally, is currently Ennoconn’s largest institutional shareholder with a 32.98 percent stake through Bao Shin International Investment Co., ahead of Fubon Life Insurance Co., which holds a 6.67 percent stake, according to Ennoconn’s annual report.

Ennoconn said it will sell 4.88 million shares to Google through the private placement at a price of NT$226.92 (US$8.22) per share, representing a 9.59 percent discount on Ennoconn’s closing price on Tuesday.

That translates to an investment of NT$1.107 billion by Google, in what would be its first acquisition of a stake in a company publicly listed in Taiwan.

According to Ennoconn, stakes acquired through a private placement cannot be disposed of for three years, and due to the regulation, the company expected it will maintain long-term ties with Google.

Ennoconn previously launched a private placement in August 2021 to bring smartphone chip designer MediaTek Inc. and artificial intelligence solution provider VIA Technologies Inc. on board to help it extend its reach in cloud technology-based applications.

Prior to the private placement deal with Google, Ennoconn worked with Google Cloud, Google’s cloud computing services, to provide high performance computing and digital services.

Benefiting from solid global demand for 5G, smart IoT and cloud technology applications, Ennoconn had consolidated sales of NT$84.49 billion in the first 11 months of 2021, up 14.4 percent from a year earlier.

Other Hon Hai subsidiaries have also been pursuing the Metaverse concept.

Foxconn Industrial Internet Co., Hon Hai’s Shanghai listed subsidiary that specializes in industrial IoT solutions, is one of them, and has gotten involved by shipping graphics processors to the global market.

The metaverse, a term coined in Neal Stephenson’s 1992 science fiction novel “Snow Crash,” refers to a collective virtual shared space where humans, as avatars, interact with each other and software agents, in a three-dimensional virtual space.

On Wednesday, Hon Hai shares rose 5.31 percent to close at NT$109.00 and Ennoconn shares soared 10 percent, the maximum daily increase, to end at NT$276.00 on the Taiwan Stock Exchange. Analysts cited the Google investment as triggering the rallies.(By Chung Jung-feng, Jeffrey Wu and Frances Huang)


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