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Microsoft to sell mobile business in Vietnam to Foxconn subsidiary

Microsoft to sell mobile business in Vietnam to Foxconn subsidiary

Thursday, May 19, 2016, 11:20 GMT+7

A subsidiary of Hon Hai/Foxconn Technology Group will acquire Microsoft’s mobile business in Vietnam as part of the U.S. tech giant's deal to sell off its entry-level feature phone assets to two separate buyers.

Microsoft’s phone business will be sold to Foxconn-owned FIH Mobile Ltd. and Finland-based HMD global, Oy (HMD) for US$350 million under the recently negotiated agreement, the Windows maker announced on Wednesday.

The deal will see FIH Mobile acquire Microsoft’s manufacturing facility in Hanoi, according to the announcement.

The deal will also see Microsoft transfer its feature phone assets, including brands, software and services, care networks and other assets, customer contracts, and critical supply agreements. The transaction is expected to close in the second half of 2016, subject to regulatory approval and other conditions.

The U.S. company said approximately 4,500 employees will transfer to or have the opportunity to join FIH Mobile or HMD upon the close of the deal.

Microsoft will continue to develop Windows 10 Mobile and support Lumia phones, including the Lumia 650, Lumia 950 and Lumia 950 XL, and phones from Original Equipment Manufacturer (OEM) partners like Acer, Alcatel, HP, Trinity, and VAIO, the company said.

Foxconn Technology is a multinational electronics contract manufacturing company headquartered in New Taipei, Taiwan, while HMD global, Oy is a private venture based in Helsinki, Finland.

Nokia Corporation also announced on Wednesday that it is bringing the Nokia brand back to the global mobile phone and tablet markets through a strategic agreement covering branding rights and intellectual property licensing with HMD.

Under the deal, Nokia Technologies, the advanced technology and licensing business of the former mobile giant, will grant HMD “an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years,” Nokia said in a press release.

“Under the agreement, Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights,” the document reads.

Nokia said HMD will provide a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets. In the agreement with Microsoft, HMD also conditionally agreed to acquire the rights from Microsoft to use the Nokia brand on feature phones as well as certain related design rights.

The separate agreements HMD closed with Nokia and Microsoft will give the Finnish company exclusive rights to produce all types of Nokia-branded mobile phones and tablets.

HMD intends to invest over $500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business, according to Nokia.

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