Hon Hai to set up auto parts production base in China's Shanxi Province

Taipei, Sept. 8, 2004 (CENS)--Taiwan's Hon Hai Precision Ind. Co. Ltd. Plans to set up a 3,000-acre industry zone in Shanxi Province, mainland China as its auto-parts production base.

Hon Hai is currently the largest private manufacturer in Taiwan, the world's largest maker of barebone PCs, connectors and TV game consoles, and one of the top-three global motherboard makers. After gaining a solid foothold in 3C (computer, communication, and consumer electronics) businesses, the gigantic conglomerate has been actively planning its 6C (3C plus channel, car, content) businesses so as to maintain a high business growth.

Hon Hai has decided to set up its auto-parts production base in Taiyuan, capital of Shanxi. The group also plans to build other facilities in different provinces of China in the future to directly supply products to auto makers across the Taiwan Strait.

Hon Hai Chairman Terry Gou claimed that 2005 will be a crucial year for his group's entry into the automobile industry and the mainland China's automobile industry is expected to see a new era in 2008. Hon Hai has started seeking auto parts-related talents in Germany, Japan and the U.S. to strengthen its auto-parts R&D and manufacturing capabilities

Hon Hai claimed that its magnesium-alloy product business division has won the QS 9000 certification, making it a qualified supplier to the international auto-parts market.

In addition to the scheduled auto-parts zone, Hon Hai is also constructing the 1,600-acre Foxconn Industrial Park in Shanxi, the group's sixth industrial zone in China. Industry sources said that Hon Hai intensively invested in Shanxi due to the province's abundant resources of aluminum and magnesium materials.

Hon Hai raked in consolidated revenues of NT$199.1 billion (US$5.84 billion at US$1: NT$34.1) in the first seven months this year, up 33% from the same period of last year. Some foreign institutional investors estimated that Hon Hai would challenge an annual revenue goal of NT$445.9 billion (US$13.08 billion), net earnings of NT$9.17 (US$0.27), and an average profit margin of 7.1% (up from 6.2% last year).

Hon Hai recorded consolidated revenues of NT$371.5 billion (US$10.89 billion) last year, shooting up 614% from 1999. The group enjoyed an annual revenue growth of over NT$100 billion (US$2.93 billion) in the past two years.

To maintain the annual revenue growth of NT$100 billion (US$2.93 billion), Hon Hai has to constantly expand its business territories in cell phones, game consoles, motherboards, graphic cards, optical-disc drives, and digital cameras etc.