Microsoft And Tech Assembler Foxconn Settle Royalty Dispute To Plot Closer Business Relations

Microsoft And Tech Assembler Foxconn Settle Royalty Dispute To Plot Closer Business Relations

Microsoft and Foxconn Technology, the world’s biggest contract assembler of consumer electronics, said this week they had settled litigation over patent royalties in the United States and pledged new relations that suggest the American software giant plans to scale up its hardware business.

Both companies said for this post hey had buried legal claims that were pending in a a court in the U.S. state of California. The court, a federal district branch, had ruled last week in favor of Microsoft.

“Microsoft Corp. and Foxconn today jointly announce that both companies are going to forge a constructive new relationship based on mutual and reciprocal business interests,” the two litigants said in a statement e-mailed late on Wednesday. “As part of this new level of relationship, both companies have agreed to settle their respective legal claims including those pending in the California court.”

Foxconn, a 46-year-old Taiwanese company founded and run until last year by billionaire Terry Gou, assembles consumer electronics for major brands including Apple. Microsoft would need to contract with Foxconn to scale up its hardware line, says Mario Morales, program vice president with the market research firm IDC.

Though best known for Windows and Office software, Microsoft already has already developed Surface PCs, digital speakers and the Kinect brand of sensors.

Foxconn’s consolidated revenues reached a record high of NT$5.33 trillion ($181.6 billion) last year.

“To scale, you really need a partner like Foxconn,” Morales says. “Everyone’s going into hardware now, and nobody does it better than Foxconn.

Microsoft may aim as well to license more products to third-party device vendors, including some that run on Google’s Android system, Morales adds. Removing the patent royalty dispute will make its partnership with Foxconn worry-free, he says.

In 2013, Microsoft had agreed to grant Foxconn rights to use Android and Chrome platform devices. But the American software icon later said Foxconn—also known as Hon Hai Precision Industry—had underpaid royalties as described in the agreement, Bloomberg Law reports. Foxconn stopped submitting royalty reports in 2015 and refused an audit, the report says. Microsoft sued last year.

Source Article