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Foxconn Builds Phone Plant in the Mainland
(SinoCast China IT Week Via Thomson Dialog NewsEdge) SEHNZHEN, November 24, 2006, SinoCast -- Foxconn International Holdings, the mobile handset arm of Taiwan's Hon Hai Precision Industry Co., plans to invest around USD 1.2 billion to build a new plant in China, a company spokesman said on November 22.
The factory will be built in China's northern city of Langfang in Hebei, between Beijing and Tianjin. The location of the plant is convenient as it lies close to the firm's customers.
Foxconn's new mobile phone factory will be located in Langfang, Hebei Province, which is known as a Silicon Valley of China.
"The current capacity we have in Shenzhen and Beijing won't be able to support our foreseeable future growth so we need a better piece of land for future expansion," Vincent Tong, a Foxconn spokesman said.
Langfang has been dubbed the Silicon Valley of China as numerous technology projects have sprouted up there over the past several years.
"We see this as a five-year plan and we will acquire a big piece of land there," Tong said. "Our CFO has already signed on to this investment." JPMorgan rates the firm at "neutral" and the company currently takes up around 48.5 percent of the global handset contract manufacturing sector.
"Tianjin is now the economic center in northern China and it's also where Motorola is so it's a natural decision. It's quite a big investment," said a JPMorgan analyst in Hong Kong.
"We still expect Foxconn's sales to grow around 50 percent in 2007 versus 2006 and if they want to maintain growth, they must continue to invest." Analysts say that Foxconn is a vital growth factor for the Hon Hai Group as the Taiwan company seeks to increase its profit from demand for higher- margin consumer gadgets and mobile phones.
Foxconn shares fell 3.2 percent on Monday, lagging a 0.8 percent drop in the benchmark Hang Seng Index.Hon Hai Precision Industry, Taiwan's top electronics parts maker, has been securing orders from top multinational vendors under its Foxconn subsidiary to strengthen its stance in the competitive mobile phone industry.
At present, Foxconn is working as a mobile phone OEM for Nokia and Motorola. A representative from the company says that Foxconn's existing factories in Shenzhen and Beijing can not meet the company's growing needs in the coming years, and this is the main reason that they have decided to set up the new factory.
Currently Foxconn accounts for about 48.5per cent of the mobile phone OEM market in the world. It is estimated that the company's revenue in 2007 will increase by 50per centcompared with that of this year.
Earlier this year, Foxconn became the target of international condemnation when articles and rumored flowed that it was mistreating its workers at a factory that provides services to Apple Computer (APPL) in China.
Hon Hai, Taiwan's top electronics parts maker has been aggressively securing orders from top multinational vendors under its Foxconn subsidiary to strengthen its stance in the highly competitive mobile phone industry.
Hon Hai, with a market value of USD 31.4 billion, is Taiwan's largest listed technology firm by revenue and it makes iPods for Apple Computer Inc, computers and components for Dell Inc., Hewlett-Packard and Sony Corp.
Copyright 2006 Sinocast
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