Foxconn might buy ECS

Taiwan-based electronics manufacturing service provider Foxconn Electronics (Hon Hai Precision Industry) reportedly is considering to acquire motherboard maker Elitegroup Computer Systems (ECS) and is said that the consideration is mainly aiming at ECS' China-based retail channel subsidiary Orbbit. However, both Foxconn and ECS refuted the rumor.

Orbbit's headquarters are located in Beijing, China and has branch offices in major cities in Taiwan, Hong Kong and China and its businesses are mainly with DIY, OEM and B2C retail channels and has a complete system for marketing, logistic and after-sales services.

Source from retail channel pointed out that Orbbit has been operating in China retail market for many years, and is one of the few Taiwan-based players having retail channel capability in China, but since the company's market share is still trailing several China-based local players, even if Foxconn acquires ECS and Orbbit by a lower-than net value price, ECS's weak operation performance since 2007 may not make the transaction worth a while.

Sources from motherboard makers pointed out that ECS is one of the few subsidiaries of Tatung Group that did not suffer from losses; therefore, Tatung is not in hurry to sell it shareholding in ECS unless there is an urgent need for cash; however, Pouchen, which would welcome an exit from the IT industry, may look to sell its shareholding of ECS.