Foxconn testing solar waters

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Foxconn Technology Group, the Taiwanese electronics giant and manufacturer of Apple iPhones and iPads, is weighing an entry into the solar panel sector.

Foxconn, the trading name of Hon Hai Precision Industry Co. Ltd., runs the Fox Energy division and operates a small solar panel factory in eastern China. In April, Fox Energy signed a deal with SunEdison to manufacture 350 MW of solar modules for the company in a manufacturing facility in Juarez, Mexico.

Despite that agreement, Foxconn is still seen as testing the solar waters and has yet to make a full commitment to an industry that has been hit hard by overcapacity and falling prices.

However, if timed right, Foxconn could benefit from its entry into the sector, according to some market analysts.

The company is aiming to make a decision about whether or not to enter the solar market by the end of the year, Reuters reported. Foxconn spokesman Simon Hsing told the news agency that the company believes "renewable energy is a potentially good trend" but added that it was "an industry we probably need to know more about."

Foxconn has not disclosed its investment in solar, which analysts believe is small, but Reuters pointed out that with $22.7 billion in cash on its balance sheet as of March, it could easily expand in into the field.

Foxconn signed a preliminary agreement with Chinese solar silicon producer GCL-Poly Energy Holdings to set up solar-related ventures in northern China but the deal has yet to bear fruit, according to Reuters.

In March, the government of the southern Guangxi Province said it planned to work with Foxconn to expand the company’s businesses in the region, including the possible construction of five solar equipment plants and 20 solar farms, although Hsing said the company had not signed any contracts with the Guangxi government with regards to solar projects.

Industry watchers expect Foxconn to be a formidable player if it indeed enters the market in view of its "cost-control expertise," Reuters reported.

The company is said to be eager to reduce its reliance on Apple, which accounted for an estimated 60% of its revenue last year. Foxconn posted a second-quarter net profit of $567.15 million on Tuesday – a 35% increase from the same period a year ago.