TAIPEI (CNA) – Liu Young-way (劉揚偉), head of Foxconn Integrated Technology Co., a semiconductor subsidiary of Taiwan-based manufacturing giant Hon Hai Precision Industry Co., has been chosen to succeed Terry Gou (郭台銘) as chairman of the parent company.
At a board meeting held on June 21, Liu was chosen as the chairman of Hon Hai by the new board of directors, including Gou, a decision closely watched by the market with many investors waiting for a succession plan at the world’s largest contract electronics maker.
Hon Hai approved the nomination of a new nine-person board of directors Friday.
In addition to Gou and Liu, the other board members are Lu Fang-ming (呂芳銘), Lee Chieh (李傑), Lu Sung-ching (盧松青), Tai Jeng-wu (戴正吳) as well as three independent directors – Wang Kuo-cheng (王國城), Kuo Ta-wei (郭大維), and Kung Kuo-chuan (龔國權), according to Hon Hai.
In early May, when Hon Hai proposed nine new board members for confirmation at Friday’s annual general meeting, Gou said that despite being nominated as a board member he would not seek the chairmanship and wanted to step back from day-to-day operations.
While Liu was chosen as the chairman of Hon Hai, Lee Chieh (李傑) was elected vice chairman by the newly minted board members.
Gou, one of the richest men in Taiwan, announced in mid-April his intention to participate in the opposition Kuomintang’s primary for the 2020 presidential election.
After Liu’s election, Gou said he has formally stepped back from front line operations, adding that while he was reluctant to give up the chairmanship, he is determined to work for the future development of the Republic of China.
Shareholders and self-claimed fans of Gou held a banner which read: “Go Go Go President Gou,” saying they hope Gou wins the presidential election in January 2020.
The new chairman of Hon Hai, also known as Foxconn on the global market, has been in charge of Hon Hai Group’s semiconductor development initiatives, with the company setting up an “S sub-business group” for that business.
Market analysts said the choice of Liu highlights Hon Hai’s desire to strengthen its semiconductor operations as the company diversifies its business operations.
After his nomination as one of the board members, Liu told the press in late May that as Hon Hai seeks to make inroads into new businesses, it will also look to own critical semiconductor technologies.
Before the decision, several international business wires had speculated that Liu was likely to take over from Gou at the head of Hon Hai.
In addition to the new board meeting, Hon Hai also set up an operations committee made up of nine members from the company and its subsidiaries to plot the conglomerate’s future business expansion.
The nine-member operations committee will operate under the board of directors.
At Friday’s annual general meeting, shareholders also approved a proposal for Hon Hai to issue a NT$4 (US$0.13) cash dividend per share for its 2018 earnings per share of NT$8.03, with a payout ratio of 49.8 percent.
As a result, Hon Hai is expected to issue a total of NT$55.45 billion in cash dividends. Gou, who owns 1.333 million Hon Hai shares, will receive a dividend payout of NT$5.34 billion.
Hon Hai Vice President Lu Fang-ming, who presided over the shareholder meeting, said the company has no plan to cut its capital size further.
In October 2018, Hon Hai completed a capital reduction plan that cut its paid-in capital by 20 percent, a move that is expected to help the company maintain its EPS at around NT$8 amid escalating competition in the global market.
Lu also described the nine-member operations committee as a consulting group for the board of directors.
The unveiling of the committee further appears to chart a collective leadership course for the company in Gou’s absence, but some analysts expect it will be hard for Gou to retreat completely from the front line because he still holds a 9.63 percent stake in Hon Hai.
Meanwhile, Lu told shareholders that Hon Hai has been working very hard to deal with possible threats resulting from on-going trade friction between the United States and China. As the most important iPhone assembler, Hon Hai employs about 1 million workers in its China-based production base. ●
By Chung Jung-feng and Frances Huang