Hon Hai invests in U.S. automotive software developer

Taipei, Dec. 10 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. has invested in U.S.-based Sonatus, an automotive software developer, by participating in the software designer’s latest round of fund raising worth US$75 million, with the move expected to promote the integration of the Taiwanese company’s automotive software and hardware capabilities.

In a statement issued earlier this week, Sonatus said iPhone assembler Hon Hai, also known as Foxconn on the global markets, led the software development’s second round of fund raising. Along with the first found, the software developer secured more than US$110 million in capital from venture capitalists, strategic partners as well as its clients.

Participating in Sonatus’s fund raising activity was part of Hon Hai’s efforts to penetrate the electric vehicle market, broaden its product portfolio and transform itself from a pure contract manufacturer into a company with integrated hardware and software strengths in a bid to boost its bottom line.

“Foxconn’s vision is expanding into the EV market where we intend to produce brand agnostic automotive solutions as we have successfully done in other industries from PCs to mobile phones,” Eric Yeh (葉光釗), senior director of Hon Hai’s Software Development Center, said in the statement.

“Sonatus has an impressive track record of delivering in-vehicle and cloud software solutions into volume production, and is a strategic partner with the right synergy to provide seamless integration between automotive software and hardware,” Yeh said.

Sonatus was set up in Sunnyvale, California in 2018 with the aim of accelerating vehicle software innovation and the transition towards software-defined vehicles (SDV) phase.

In addition to Hon Hai, the major investors in Sonatus include UMC Capital, a subsidiary of Taiwan’s contract chipmaker United Microelectronics Corp., South Korea’s Hyndai Motor Group and KIA Corp. and LG Electronics, U.S.-based electronics suppliers Marwell Corp., Translink Capital and SAIC Capital.

According to Sonatus, its software platform is in production in Hyundai, Kia and Genesis vehicles, including multiple Genesis car and SUV models, while the platform is also used in the Hyundai Ioniq 6, and others, and will be in millions of cars by 2023.

Industrial sources said Hon Hai has entered into talks with Sonatus in various businesses, including automotive software design and cloud services, a move expected to help the Taiwanese investor use the applications in EV development.

Hon Hai has laid out a business-development roadmap called the “3 plus 3” initiative, referring to three emerging industries — EVs, robotics, and digital health care — that utilize artificial intelligence, semiconductor, and communication technologies. EVs have become a critical part of the initiative.

Meanwhile, Hon Hai said it has spent US$500 million to raise its investment in the Indian subsidiary Foxconn Hon Hai Technology India Mega Development Private Ltd., as a long-term investment in the South Asian country.

Market analysts said it is possible Hon Hai will use the investment to expand production capacity in its complex located in Chennai, the capital city of the Indian state of Tamil Nadu, where the Taiwanese company rolls out iPhones.

In a recent research report, Kuo Ming-chi (郭明錤), an analyst with TF International Securities, who is well known for his research into Apple Inc. and its suppliers, said India is likely to become the largest iPhone assembly base outside China. In the initial phase, India’s production is expected to meet demand from consumers in North America, Kuo said.