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Hon Hai considers diversifying into medical equipment

Hon Hai Precision Industry Co (鴻海精密), the world's largest electronics component maker, is considering diversifying into the medical equipment sector to seek further growth, a company executive told shareholders yesterday.

During the annual shareholder's meeting, chairman Terry Gou (郭台銘) said the medical equipment industry may be one of next star-performing sectors and the company would not rule out the possibility of entering this market, shareholder Huang Shue-feng (黃雪芬) said, citing Gou.

"Gou said his inspiration came from his experiences when taking care of his ill younger brother. Gou has visited a Japanese medical equipment company [for possible cooperation]," Huang said.

Hon Hai, headquartered in Tucheng (土城), Taipei County, has been keeping a low profile recently. Reporters were not allowed to attend the company's shareholders meeting this year, which was considered a rare opportunity for the media to interview Gou face to face about Hon Hai's operations.

"The medical equipment market would be a new field for Hon Hai. To sustain growth in the long term, Hon Hai needs to explore potential areas as its competitors do," said Lu Chia-lin (呂家霖), an analyst with Yuanta Core Pacific Securities (元大京華證券).

Hon Hai may have easier access to the industry than competitors as its digital camera unit, previously known as Premier Image Technology Corp (普立爾) before a takeover deal last year, supplies cameras to Japan's Nikon Corp and Olympus Corp, which also run medical equipment businesses, Lu said.

Most electronics manufacturing service providers, such as Flextronics International Ltd, have tried to diversify their product lines as possible to boost revenue scales and some have been in the medical equipment market for years, Lu said.

Hon Hai would hit its target of expanding revenues by 30 percent from last year driven mostly by demand for mobile phones and games consoles, Gou told shareholders.

With products including Apple Inc's i-phones and Sony Corp's PlayStation 3 to start shipping this year, it should be a practical goal for Hon Hai to add 30 percent more revenues this year, Lu said.
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