Motorola sells cell-phone plant to Taiwan’s Hon Hai

Taiwan’s Hon Hai Precision Industry Co. Ltd. has agreed to purchase a Mexican manufacturing facility for cellular phones from Motorola Inc. for an undisclosed sum as part of a deal that includes a multi-year manufacturing agreement, the company said in a document filed with the Taiwan Stock Exchange on Friday.

Motorola has been shutting down or selling off manufacturing plants in recent years to cut costs and raise its competitiveness. Most recently, the company announced plans to spin off its Semiconductor Products Sector, which makes networking processors, applications processors for handheld devices, and digital signal processors.

The cell-phone manufacturing plant that Hon Hai has agreed to acquire is located in Chihuahua, Mexico, and is part of Motorola’s Personal Communications Sector.

Details of the multi-year manufacturing agreement were not disclosed by either party, but the deal marks an expansion of an existing manufacturing relationship between the two companies. Motorola has outsourced manufacturing of some products to Hon Hai for three years and the company has agreed to purchase Motorola-branded handsets manufactured at the Chihuahua plant for several years to come, the company said.

Taiwanese companies form the manufacturing backbone for much of the IT industry, producing a diverse range of products, including servers for Sun Microsystems Inc. and personal digital assistants (PDAs) for Dell Inc.

Hon Hai is one of the largest and most important of these Taiwanese hardware manufacturers, producing desktop PCs and motherboards, among other products, under contract for some of the biggest brand names in the industry.

Hon Hai plans to acquire the Chihuahua plant, which will operate as Foxconn Mexico Precision Industry Co. S.A. de C.V., through a wholly owned subsidiary, Foxconn International Holdings Group. Financial terms of the deal were not disclosed, but Motorola said that a commitment from Hon Hai to continue providing employment for the 1,100 workers at the plant was one condition of the agreement.

The sale of the plant is expected to be completed within 90 days, according to Motorola.