Hon Hai Precision Industry Co Ltd (鴻海精密) yesterday denied reports that appeared in the local media, citing Fitch Ratings data, that the company has borrowed about NT$300 billion (US$10.34 billion) from local banks, putting its creditors on the brink of the 15 percent cap on lending to a single corporation.
“The company recently borrowed about NT$60 billion from banks, which accounted for less than 5 percent of any of our creditor’s net worth,” Hon Hai spokesman Edmund Ding (丁祁安) said in a filing to the Taiwan Stock Exchange yesterday.
“The reports are incorrect,” Ding said in the statement.
Hon Hai is the world’s largest maker of electronic components. It is also a major assembler of Sony TVs, HP printers and Apple iPhones and iPads.
Like many other Taiwanese firms, Hon Hai has used bank loans and proceeds from bond issues to buy equipment and expand capacity at a time when the nation’s borrowing costs are still relatively low. However, regulations do allow Taiwanese banks to lend up to 15 percent of their net worth to a single borrower.
The Taipei Times yesterday sought clarification on the matter from Fitch Ratings, which said its figures were based on Hon Hai’s own financial statement.
As of March 31, Hon Hai has borrowed NT$252.51 billion in short-term loans and NT$45 billion in long-term loans, the balance sheet submitted to the Taiwan Stock Exchange indicated.
As of the first quarter of this year, the company had NT$280.53 billion in cash.
“It is normal for a huge company like Hon Hai to borrow NT$300 billion,” Fitch Ratings analyst Jonathan Lee (李信佳) said by telephone.
“The core issue is that local banks could face unacceptably high risks if they do not go global as their borrowers have done,” Lee said. “They should not put all of their eggs in one basket.”
Generally speaking, banks are exposed to excessive risk if they lend 10 percent of their net worth to a single corporation, Lee said.
Hon Hai’s borrowing made up 14.3 percent, according to Fitch Ratings.
As domestic liquidity is ample, local banks charge a low interest rate on corporate loans, which is insufficient to cover the risk, Lee said.
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to