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Hon Hai Tumbles After Explosion at Foxconn Factory in China

A pedestrian exits the headquarters of Hon Hai Precision Industry Co. in Tucheng, Taiwan. Photographer: Maurice Tsai
A pedestrian exits the headquarters of Hon Hai Precision Industry Co. in Tucheng, Taiwan. Photographer: Maurice Tsai

May 23 (Bloomberg) -- Hon Hai Precision Industry Co., the maker of Apple Inc. iPhones and iPads, tumbled to the lowest in almost two years in Taipei trading after an explosion at a factory in Chengdu, China, killed three workers.

The company, Foxconn Technology Group’s flagship unit, dropped as much as 5.2 percent to NT$97.70, the lowest since August 2009. In Hong Kong, handset-manufacturing unit Foxconn International Holdings Ltd. tumbled as much as 5.7 percent.

The maker of Apple Inc.’s iPhones and iPads said the explosion, which also left 15 employees injured, started with combustible dust at about 7 p.m. on May 20. The incident comes a year after a spate of suicides at Foxconn’s main manufacturing base in Shenzhen prompted the electronics maker to raise wages and move more Chinese production inland.

“We expect Hon Hai’s original facilities in Shenzhen could quickly make up some of the shortfall from Chengdu by ramping up the idle capacity,” Kirk Yang, an analyst at Barclays Capital in Hong Kong, wrote in a note today. “We would see any resulting price weakness as a sensible time to add to positions.”

Foxconn spokesman Edmund Ding didn’t answer calls to his mobile phone. The company, which is working with local government officials to investigate the cause of the explosion, has declined to comment on the details of the accident beyond the statement.

‘Serious’ Condition

“All operations at the affected workshop remain suspended and production at all other workshops that carry out similar processing functions have also been halted pending the results of the investigation,” Foxconn said in its statement. “All other production operations in our facilities in China continue operating normally.”

Sichuan Provincial People’s Hospital has admitted four workers in “serious” condition with large areas of their bodies burnt, said Li Wei, a doctor at the hospital burn unit, said by phone today. He declined to comment further.

Apple, the world’s second-biggest company by market value, said it’s in contact with Foxconn to investigate the incident.

“We are working closely with Foxconn at this point to understand what caused this terrible event,” Steve Dowling, a spokesman for Cupertino, California-based Apple, said in a May 20 phone interview. “We are deeply saddened by the tragedy.”

The $2 billion plant where the explosion took place opened in October, Xinhua reported May 20. The facility makes Apple’s iPad 2, the Beijing-based Economic Observer reported on its website, citing unidentified company workers.

Police in Chengdu said they concluded preliminarily that the explosion, in a polishing workshop, wasn’t intentionally caused, China News Service said.

To contact the reporters on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net; Chinmei Sung in Taipei at csung4@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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