Hon Hai agrees to invest US$1bn in China plants

Hon Hai group, controlled by Taiwan-based billionaire Terry Gou (郭台銘), signed an agreement to invest US$1 billion to build "several" electronics factories in northern China, a government official said.

The factories, to be located at the Qinhuangdao Economic and Technological Development Zone in Hebei province, may employ as many as 30,000 workers, Sun Liming, a spokesman for the development zone, said yesterday by telephone. Calls to the mobile phone of Hon Hai spokesman Edmund Ding (丁祈安) went unanswered.

The group, which includes Hon Hai Precision Industry Co (鴻海精密), the world's largest maker of electronics for other companies, is expanding production on increased sales to customers such as Apple Inc and Chinese phone equipment maker Huawei Technologies Co (華為技術). Hon Hai Precision said in January it may invest US$1 billion to build factories in Vietnam to help the company meet sales targets.

Approval needed

Hon Hai still needs Chinese government approval for the investment, Sun said. The group hasn't set a timeframe for construction of the plants, whose products may include printed circuit boards used to connect electronic parts, he said.

Sales at Hon Hai Precision rose 42 percent from a year earlier to NT$71.6 billion (US$2.2 billion) in February.

In June last year, chairman Gou said he aimed to raise the company's annual sales by an average 30 percent for five years.

Hon Hai Precision shares fell 1.1 percent to close at NT$219.50 on the Taiwan Stock Exchange. The stock dropped 5.6 percent this year, compared with a 0.8 percent gain in the benchmark TAIEX index.

Gou is Taiwan's second-richest person with an estimated wealth of US$5.5 billion, behind Cathay Financial Holding Co (國泰金控) Chairman Tsai Hong-tu (蔡宏圖), according to Forbes Magazine.