Foxconn agrees to buy half of Mitsubishi Electric's auto-equipment business for ¥115 billion

Hon Hai Precision Industry, the Taiwanese manufacturer known as Foxconn, has agreed to buy half of Mitsubishi Electric's automotive equipment business for an expected ¥115 billion, giving it a partner in electric powertrains and vehicle software as it pushes deeper into the car industry.

The terms

Lin Yin International Investment, a wholly owned investment company of Hon Hai Precision Industry, will acquire 50% of Mitsubishi Electric Mobility, the subsidiary that runs Mitsubishi Electric's automotive equipment business, the two companies said on Friday. The expected price is ¥115 billion, or about $728 million at the conversion used by Taiwan's Central News Agency. The share transfer agreement puts the business's enterprise value at ¥320 billion and, after accounting for changes in its assets after signing, its equity value at ¥230 billion. The price is half of that equity value.

Before the sale, Mitsubishi Electric will transfer the rights and obligations it still holds in the automotive equipment business to Mitsubishi Electric Mobility through a company split, and move related operations held by its group companies in Japan and abroad into the unit. The deal needs clearance from competition authorities in Japan and other countries. Mitsubishi Electric said it expects to complete it in October 2027; Hon Hai gave a date of Oct. 1, 2027. After that, the two companies will run the unit together.

The companies first said they were exploring a tie-up in April, when Mitsubishi Electric signed a memorandum of understanding with Hon Hai and said it was considering transferring half of the unit's shares.

What Mitsubishi Electric is handing over

The automotive equipment business had revenue of ¥875.6 billion in the fiscal year that ended March 31, 2026, out of ¥5.89 trillion for the whole Mitsubishi Electric group. Nikkei reported that the business's revenue fell 5% that year while its operating profit rose 52% to ¥54.4 billion, and that the unit, which has about 6,400 employees, holds a large share of the market for alternators used in gasoline cars and also makes motors and inverters for electric vehicles.

Mitsubishi Electric Mobility, which was split off from its parent in April 2024, reported standalone revenue of ¥657.6 billion and operating profit of ¥13.2 billion for the same fiscal year, after an operating loss of ¥1.08 billion the year before.

Once the sale closes, Mitsubishi Electric will stop consolidating the unit and will instead account for it as an equity-method affiliate, starting in the third quarter of the fiscal year ending March 2028. The company said it expects to book an impairment loss of about ¥100 billion in connection with the sale in the current fiscal year, which ends March 31, 2027. It said it is reviewing its full-year forecast and plans to announce it on Oct. 30.

What Foxconn gets

The companies said the joint operation would pair Mitsubishi Electric Mobility's technology in electric powertrains, software and vehicle control with Hon Hai's speed, scale and strength in bringing products to market. They plan to offer electric-vehicle platforms, the basic structures that vehicles are built on, developed in Japan, and over the medium to long term to take that technology to global markets.

Electric vehicles are one of the new industries targeted by Hon Hai, which describes itself as the world's largest electronics manufacturer, under a strategy that also includes robotics and digital health. Hon Hai entered the electric-vehicle business in 2019 and mainly designs and builds vehicles under contract for automakers, Nikkei reported, adding that Hon Hai will use the investment to bring Mitsubishi Electric Mobility's technology and know-how into that business and noting that the unit's inverter technology affects how far an electric car can travel.

The deal also extends Hon Hai's ties to Japanese industry. In January, it reached a final agreement with Mitsubishi Fuso to set up a new bus maker in Japan, the business news site Business+IT reported.