Minister of Economic Affairs Shih Yen-shiang (施顏祥) yesterday reiterated his support for the world’s top electronics maker, Hon Hai Precision Industry (鴻海精密), saying the firm was unlikely to suspend new investments in the home market.
“Chairman Terry Gou (郭台銘) is unlikely to pull investment out of Taiwan. We will continue to communicate with him,” Shih told reporters yesterday.
The minister lent support to Hon Hai, as the world’s biggest electronic components maker has found itself engulfed in a spate of negative press following worker suicides and company officials involved in sex scandals.
Hon Hai said on Wednesday it would review its plans to make further investments in Taiwan after public accusations that the company mistreated its Chinese employees.
Shih said Gou has made great contributions to Taiwan’s economy and that few entrepreneurs could rival his efforts to build electronics production lines as part of the backbone of Taiwan’s exports.
He urged the public to back Gou during this difficult time.
Twelve employees at Hon Hai’s massive Chinese factories plunged to their deaths in alleged suicides this year, prompting the company to take a series of measures to improve conditions, including doubling the minimum wage to 2,000 yuan (US$295), which will take effect in October.
Hon Hai, whose trade name is Foxconn (富士康), assembles a range of gadgets and personal computers for big brands, including Apple Inc, Sony Corp and Dell Inc.
Hon Hai said last month it was evaluating several expansion projects in China’s inland provinces as the company aims to meet growing demand for its products.
The Chinese city Hebi, in Henan Province, recently posted a recruitment message on its Web site, saying it was looking to hire 100,000 workers for a 300,000-worker Foxconn factory.
Macquarie Equities Research said in a report on Friday last week that the wage issue would affect Hon Hai’s performance in the wake of a short-term jump in labor costs, but its revenue momentum still looked good.
“The consensus expects Hon Hai to enjoy strong revenue momentum from its exposure to iPad, iPhone, notebooks and TV share gains,” analyst Daniel Chang (張博淇) said.
Macquarie adjusted upward its forecast, saying it expected Hon Hai to ship more than 14 million iPhones in the third and fourth quarters.
“Given [that] Apple has announced a strong sell-through of 3 million iPads in the first 80 days after the launch, we believe [shipments of] the product could challenge over 20 million in 2011,” he wrote.
Total sales of both products would account for 12 percent to 15 percent, and 20 percent of Hon Hai’s total revenues for this year and next, he said.
However, Hon Hai on Wednesday said it was reassessing plans to invest in Taiwan because of negative publicity over the workers’ deaths at its Chinese factories.
“Chairman Gou got frustrated [with the negative publicity]. Are they trying to force Hon Hai [to invest] in some place other than Taiwan?” company chief financial executive Huang Chiu-lien (黃秋蓮) asked a media briefing on Wednesday.
“Those incidents have had a great impact on our reputation. We are adjusting and reviewing [our investments]. We will come out with a timetable later,” Huang said without further elaboration.
In April, the Ministry of Economic Affairs gave the go-ahead to Hon Hai’s NT$1.9 billion (US$59.1 million) investment in Kaohsiung Software Technology Park (高雄軟體科技園區), where the electronics giant planned to build a center for data-related and cloud computing businesses.
The ministry said Hon Hai was scheduled to build the center in the middle of this year, but no ground-breaking date has been decided.
In related news, Premier Wu Den-yih (吳敦義) said yesterday that he believed the Hon Hai chairman would “respond positively” to public expectation that the company would continue to invest in Taiwan, dismissing speculation that it might suspend its Taiwanese investment plans.
“[Gou] has made very impressive achievements and extensive investments,” Wu told reporters on the sideline of a regular media briefing following the Cabinet’s weekly meeting.
“We hope that [these incidents] will not affect chairman Gou’s determination to develop the business sector [in Taiwan] or his plan to return to Taiwan to establish more businesses ... to live up to many people’s expectation of him,” Wu said.
Wu said he believed Gou would not be defeated because in the past he has shown perseverance when facing difficulties.
When asked for comment, Chinese Nationalist Party (KMT) Legislator Lu Chia-chen (盧嘉辰) of the Economics Committee voiced support for the company, saying that the government should enhance communication with corporations to keep them in Taiwan.
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