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Japan-Update

Foxconn, SoftBank plan tech investment venture

Taiwanese firm to also set up medical equipment venture with Sharp

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  © Reuters

TOKYO/OSAKA -- Taiwan's Hon Hai Precision Industry will soon take a majority stake in a SoftBank Group asset management company in Singapore, furthering cooperation with the Japanese telecom giant known for its venture capital investments in the information technology space.

A Chinese subsidiary of the contract manufacturer known as Foxconn will pay $600 million for a 54.5% stake in SoftBank Group Capital Apac, turning the company into a joint venture. The deal is expected to close this coming Wednesday. SoftBank said Friday that it received 132.6 billion yen ($1.18 billion) in dividends from the Singaporean unit.

"Integrating [SoftBank's] investment expertise into Foxconn's global presence and network is expected to convey new insights" into investment, SoftBank said in a statement. Foxconn will take the lead on future investments, expected to focus on the IT sector. The Taiwanese company will also likely back the Japanese telecommunications giant's planned $100 billion technology fund, though SoftBank has said the joint venture is a separate matter.

The venture marks a deepening of ties between Foxconn Chairman Terry Gou and SoftBank chief Masayoshi Son. The two tycoons met most recently in Beijing in late January, weeks after Son told reporters that SoftBank and Foxconn would jointly invest about $57 billion in the U.S. and create 100,000 jobs following a meeting with then-U.S. President-elect Donald Trump in December in New York.

The Nikkei Asian Review reported in October that Foxconn was partnering with SoftBank-controlled ARM Holdings to set up a chip design center in the Chinese city of Shenzhen. Gou also approached Son for advice earlier in 2016, when Foxconn was in the process of acquiring Japan's Sharp.

The two Asian tech groups and Chinese e-commerce giant Alibaba Group Holding came together in 2015 to set up a joint venture for global marketing and sales of the Pepper humanoid robot manufactured by Foxconn for SoftBank. The pair also have teamed up on various Indian investments, including in the solar and e-commerce sectors.

Another Foxconn subsidiary, Fabrigene, is set to invest in Sharp operations related to health care and medicine. The Japanese company said Friday that it will transfer them to three new entities and place them under a Sharp-owned holding company, effective this coming Wednesday. Cayman Islands-domiciled Fabrigene will then take a majority stake in the holding company March 31, turning it into a joint venture.

The holding and operating units are expected to employ around 90 workers at first. The joint venture will work toward boosting sales of Sharp medical analysis equipment, as well as promoting the development of new analysis technologies. The Japanese company has been selling protein analysis equipment and developing sensors for analyzing intestinal sounds and new technologies for measuring blood pressure.

New efforts could include selling Sharp health-care- and medicine-related products overseas, including medical facilities run by the Foxconn group. Those products have practically been sold only in Japan.

The reorganization is part of a broader plan at Sharp to stoke growth and technological development in fiscal 2017. Foxconn and Sharp are stepping up collaboration across the board to reap maximal synergies from the Taiwanese giant's acquisition of the Japanese company.

Sharp formed a joint venture with a Foxconn unit last autumn to manage intellectual property. Furthermore, a company formed from Sharp's logistics operations has been brought into the Foxconn group.

Nikkei staff writer Debby Wu in Taipei contributed to this report.

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