Hon Hai Precision Industry Co (鴻海精密), one of Taiwan's largest electronics component makers, is challenging Flextronics International Ltd's top position among electronics manufacturers by boosting its revenues this year to around NT$460 billion, analysts said yesterday.
Hon Hai's consolidated sales for last year increased by roughly NT$100 billion to around NT$362.2 billion, a representative from the company confirmed chairman Terry Gou (
That represents about 40-percent growth from the NT$257 billion the company recorded in 2002.
Kuo expected the momentum to carry into this year and to add another NT$100 billion on the top of 2003 revenues, helped by an increase in communications and networking businesses following three major acquisitions in those areas last year.
That increase will bring Hon Hai's 2004 consolidated revenues to around NT$462.2 billion (about US$13.59 billion), exceeding the US$13.4 billion Flextronics recorded for its revenues in the fiscal year ending March 31.
Hon Hai ranked the world's No. 3 electronics provider last year, up two notches from No. 5 in 2002, based on sales results.
Taking a big stride toward the fast-growing communications and networking businesses, Hon Hai bought into Ambit Microsystems Corp (
The Taiwanese company yesterday also confirmed that it became the world's first supplier of Intel Corp's new BTX (Balanced Technology Extended) motherboard for desktop computers. A motherboard -- a circuit board on which computer chips are joined together -- is the basis of a computer.
"If Hon Hai hits that goal, the Taiwanese company is very likely to outrank Flextronics International and Solectronics, LLC to become the world's No.1 [electronics] manufacturer," said Chen Wei-dong (陳維東), an analyst with Grand Cathay Securities Co (大華證券).
Chen said the communications and networking businesses will be Hon Hai's new growth engine this year following the acquisitions.
Ambit alone will be able to contribute a big chunk, with NT$60 billion to NT$70 billion in annual sales on average in the past years, he added.
Hon Hai is expected to make 30 million handsets this year, according to Chinese-language media reports released yesterday.
The communications and networking businesses are expected to account for 30 to 40 percent of Hon Hai's total sales this year, Chen said. But that is still lower than 60 percent networking equipment sales for Flextronics and Solectronics, Chen added.
"But, what excites me is that Hon Hai will see a significant improvement in profitability as a result of the purchase of two mobile phone factories last year, when its international electronics manufacturing services rivals are seeing weakening profitability," Chen said.
Gross margins for cellphones are much better at about 10 to 13 percent than the slim 6 to 7 percent margin for PCs, he added.
Agreeing with Chen's comments, Wu Pei-wei (
"Hon Hai's high growth rate impresses me. I would suggest investors buy Hon Hai shares for long-term investment," Wu said.
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