Hon Hai upsets TSMC in national revenue ranking

Hon Hai Precision Industries Co (鴻海精密) unseated Taiwan Semiconductor Manufacturing Co (台積電) as the highest revenue-generating private company last year, according to a Chinese-language Business Weekly (商業週刊) report yesterday.

Leaping from eighth place in 2000, Hon Hai's NT$144 billion in revenue last year ranked second while state-run Chinese Petroleum Corp (中油) remained on top of the list with NT$421.6 billion in sales, although its revenue contracted by 11 percent.

"Among the top 10 companies, six are from the electronics sector, which is still booming, leaving traditional industries far behind in their wake," Darid Wang (王學呈), the magazine's deputy editor in chief, said yesterday at a press conference.

TSMC's revenue declined by 24 percent. Wang said Hon Hai's success was due not only to strong demand for personal computers, but also its strategy of chasing the low-priced computer market, helping it to grow revenue by 57 percent last year.

"The company has successfully transformed itself from an electronics component maker to a bare-bones computer-system maker -- a role model for high-tech innovation," Wang said.

He added that Hon Hai's operations in China also helped it to maintain an advantage.

With the opening up of the domestic gasoline market, Formosa Petrochemical Corp (台塑石化), dubbed the "dark horse," finished in third place with NT$128 billion in revenue last year, for growth of 149 percent.

"Formosa's success lies in its business strategy of offering gifts [at gas stations] and expanding its distribution network," Wang said.

Low costs and efficient management are also advantages, he said.

The impact of the global economic recession was evident in some parts of the electronics industry. Nine of the nation's top 10 companies whose revenue contracted the most came from the sector.

Those hit hard included Winbond Electronics Corp (華邦電子), Philips Electronic Industries Ltd (飛利浦電子), Powerchip Semiconductor Corp (力晶半導體) and Mitac International Corp (神達電腦).

"The price reduction in DRAM was the major reason for our revenue contraction last year," Powerchip's Chairman Frank Huang (黃崇仁) said yesterday after the press conference. Revenue fell even though production volumes at the company rose.

Victor Tsan (詹文男), managing director of the Market Intelligence Center at the Institute for Information Industry (資策會), said yesterday he remained optimistic about the competitiveness of domestic high-tech manufacturers.

Tsan said many manufacturers were expanding in their core business and were strong rivals to their foreign competitors.

Asked about which companies will be the rising stars in the next decade, Tsan said those with strong research and development, product innovation and human capital should be promising.

Wang said MediaTek Inc (聯發科技), which ranked 71st on the list, was a company to watch. "The company will be a model to usher in Taiwan's era of IC design," the magazine editor said.