Magazine

No. 12: Hon Hai Precision Industry


INDUSTRY

Electronics

SALES

$16.9 billion

PROFITS

$930 million

DAVID HARTUNG

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. () to cell phones for Nokia Corp. to PlayStation2 game consoles for Sony Corp (). 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. () 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. () and Intel Corp. () If Gou retires as planned in 2008, Hon Hai will have no easy time finding a successor with his management skill and tenacity.


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