Skip to content
Subscriber Only

A Juggernaut In Electronics

Taiwanese contract manufacturer Hon Hai has blown past rivals. Has it grown too big?

Even as electronics manufacturers have stumbled in recent years, one company--Taiwan's Hon Hai Precision Industry Co.--has blown past the competition to become the top player in the industry, churning out all manner of products for name-brand gadget makers. For evidence of the Taiwanese giant's strength, look no further than Flextronics International Ltd.'s $3.6 billion takeover of Solectron Corp., announced on June 4. Hon Hai "is the key reason Flextronics and Solectron merged," says Byron Wu, China research manager for electronics market watcher iSuppli Corp.

While rivals have suffered from shaky earnings, overcapacity, and languishing stock prices, Hon Hai has continued to surge ahead. Even though Hon Hai is now No. 1, it's growing faster than the other major players, making marquee products such as Apple's iPod and forthcoming iPhone, Sony's (SNE ) PlayStation 3, Nintendo's (NTDOY ) Wii, Hewlett-Packard printers and PCs, and thousands of other gizmos. Hon Hai's sales jumped 44% last year, to $40 billion, which is more than the combined revenues of its three nearest rivals, Flextronics, Solectron, and Jabil Circuit. Profits for Hon Hai climbed 47%, to $1.8 billion, for the year. And its stock? Up 52% in the past 12 months.