Hon Hai Precision Industry Co. is a rags-to-riches story. Founder Terry Gou started the company in 1974 in a Taiwan industrial suburb of Taipei with a $5,000 loan from his family. He initially made plastic parts for TV sets. Now Hon Hai assembles everything from PCs for Hewlett-Packard Co. (HPQ ) to cell phones for Nokia Corp. to PlayStation2 game consoles for Sony Corp (SNE ). And Gou is a billionaire.
His strong work ethic and relentless cost-cutting have turned Hon Hai into a cash machine. Profits for this year are projected to rise 24%, to $1.2 billion. Although margins are under pressure from fierce competition, the company remains ahead of rivals. Just last year Hon Hai surpassed Flextronics International Ltd. (FLEX ) to become the world's No. 1 electronics manufacturing services company.
Gou has consistently been able to undercut competitors' prices as much as 20% by leveraging a cheap, 100,000-plus workforce in China. And his footprint is widening. The company recently bought cell-phone manufacturer Chi Mei Communication Systems Inc. and wireless local-area network equipment maker Ambit Microsystems Corp., whose customers include Motorola Inc. (MOT ) and Intel Corp. (INTC ) If Gou retires as planned in 2008, Hon Hai will have no easy time finding a successor with his management skill and tenacity.