At the end of last year, there were rumors floating around about Foxconn’s decision to buy ASUS manufacturing division – Pegatron Technologies. Rumored response to Foxconn was pretty much, "ok, you can buy it" – but you have to end retail sales.
Said – done. Back at the end of last year, closing down its channel sales would have been a pretty large dent into Foxconn’s revenue as they were building momentum with a few very nice enthusiast boards – namely the Black Ops X48 and the Blood Rage X58 boards. These two achieved wild popularity with the overclocking crowd. There were more enthusiast products on the way as Foxconn Channel began to cater to the High-End overclocking and performance user demands.
Of course, this was before the bottom seemed to drop out of the computer market – as people became scared of losing their homes and jobs. As the economic crisis moves into its seventh month we hear rumors again, this time saying that Foxconn is indeed closing out their retail channel business. The close should come around June, meaning that Foxconn Channel will not have a fancy presence Computex this year. According to the rumors, the staff is aware and has been given their notice of release. Sources suggest that final close will happen by June and that the Channel division is already well in the process of shutting out the lights and leaving the building.
Although this is a rumor as of right now, something that might pop up to confirm this would be an announcement that Foxconn is buying Pegatron. Be on the lookout for this type of announcement to corroborate the Foxconn Chanel closure. With this closure, the way for an acquisition of Pegatron Technologies is wide open. This would not only give Foxconn increased manufacturing capacity but also the clients and contacts already held by Pegatron. ASUS would get rid of a competitor as well as receive some extra funds. ASUS has long been working on establishing channel dominance and at the time of this writing, the company is making a tremendous amount of retail products in addition to its component sales. It looks like this would be a win-win situation for both companies and would allow them even greater penetration into the worldwide markets without the increased cost, as it would divide the market between them: ASUS takes the role as a Global Brand and Foxconn as a Global OEM. Once completed, ASUS can go head to head with the big players in the US like Dell, HP and IBM, while at the same time Foxconn is the company that will manufacture most of components for the brands mentioned above.
In the end, whatever the reason, it will be sad to see a player in the enthusiast section go, as it reduces the number of competing companies that drive innovation and prices. It goes without saying that any company closure means more people out of work at a very shaky time… and that is a real shame no matter how you look at it.
UPDATE March 26th, 2009 17:59 CET: We have received word that Foxconn officially dismissed this rumor. According to a statement from Miss Sidney Tsai, representative in PR department at Hon Hai Precision Industry [Foxconn's mother company], Foxconn Channel business is not set to close. The email also suggests that Foxconn Channel will be at Computex this year.
However, we tried to get this story confirmed by our representatives at Foxconn Channel. There was just a slight problem: everybody received their pink slips and they’re simply not working for Foxconn anymore. So, unless Hon Hai decided to fire several hundred people and then do a massive wave of re-hiring, we’re not sure how they plan to achieve their targets. However, we do wish all the best to both former and current employees over at Hon Hai Precision Industry.