The rating on Taiwan-based Hon Hai Precision Industry Co. Ltd. (Hon Hai; BBB/Stable/--) reflects the company's low-cost competitiveness, consistent record of solid operating performance, and satisfactory financial profile, as well as a favorable industry trend toward outsourcing. However, these factors are moderated by Hon Hai's high degree of customer concentration, exposure to rapid product cycles in volatile end markets, and challenges associated with managing rapid growth, as well as ongoing pricing pressure in the highly competitive industry environment. Hon Hai is a global provider of personal computer components and electronic manufacturing services for original equipment manufacturers. The company's sales increased by 50% year on year to about US$4.4 billion in fiscal 2001 despite a drop in demand in its major
