Bulletin: Hon Hai's Rising Exposure To Electric Vehicle Business Is Credit Positive

TAIPEI (S&P Global Ratings) Aug. 17, 2021--Taiwan Ratings Corp. S&P Global Ratings said today that Hon Hai Precision Industry Co. Ltd.'s (A-/Stable/--) increasing diversification into electric vehicle (EV) business and growing revenue contribution from auto components is moderately positive for the company. Nonetheless, it will take time for this business line to bring significant benefit to Hon Hai's credit profile. EV business could serve as a long-term growth avenue for Taiwan-based Hon Hai, given the diversification strategy of its key customer Apple Inc. and relatively low growth for the smartphone market in general. That's despite the likelihood of higher sales for Apple's iPhone models over the next few quarters, aided by growing demand for newer fifth generation (5G) devices as

...August 16, 2021 TAIPEI (S&P Global Ratings) Aug. 17, 2021--Taiwan Ratings Corp. S&P Global Ratings said today that Hon Hai Precision Industry Co. Ltd.'s (A-/Stable/--) increasing diversification into electric vehicle (EV) business and growing revenue contribution from auto components is moderately positive for the company. Nonetheless, it will take time for this business line to bring significant benefit to Hon Hai's credit profile. EV business could serve as a long-term growth avenue for Taiwan-based Hon Hai, given the diversification strategy of its key customer Apple Inc. and relatively low growth for the smartphone market in general. That's despite the likelihood of higher sales for Apple's iPhone models over the next few quarters, aided by growing demand for newer fifth generation (5G) devices as part of the sector's upgrade cycle. We believe it could take a few years for Hon Hai to bring meaningful improvement to its EV business scale and return solid profits from this sector. That's...

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