Foxconn production output to jump

Foxconn International Holdings Ltd (富士康控股), the world's largest contract cellphone maker, will double production capacity by the end of next year to meet orders from handset makers led by Sony Ericsson Communications Ltd.

The expansion will give Foxconn the capacity "to do US$20 billion of business" next year, about double the revenue of last year, chairman Samuel Chin (陳偉良) told reporters after a meeting of shareholders in Hong Kong today.

Shenzhen-based Foxconn's sales rose 64 percent to US$10.4 billion last year from a year earlier.

Foxconn plans to gain orders from companies including Samsung Electronics Co to offset slowing growth in sales to Motorola Inc, which accounted for more than half of 2006 revenue, according to UBS AG. Sales to Sony Ericsson would exceed 10 percent of total revenue this year, compared with a "single digit" figure last year, Chin said.

"Sales from Motorola will grow a lot less this year, so Foxconn will need to boost sales to other customers," said Steven Tseng (曾續良), a Taipei-based ABN AMRO NV analyst, before the announcement.

The analyst, who has a "hold" rating and a target price of HK$26 for Foxconn's stock, estimates the firm may lift revenue 35 percent this year.

Motorola accounted for 53 percent of Foxconn's sales last year, UBS analyst Arthur Hsieh (謝宗文) wrote in March. That may drop to 47 percent this year as the Chinese firm increases sales to Nokia Oyj, its second-biggest customer, and Sony Ericsson, Hsieh said.

Foxconn, a unit of Taiwan's Hon Hai Precision Industry Co (鴻海精密), will increase orders from Samsung in the second half, even though contributions from the South Korean company "won't be significant in 2007," Chin said.

Shares of Foxconn fell 1.4 percent to HK$20.95 at the close of trading in Hong Kong today, against a 0.1 percent gain in the Hang Seng Index.