The rating on Hon Hai Precision Industry Co. Ltd. (Hon Hai) reflects the company's strong cost position, solid operating performance, satisfactory financial profile, and 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 ongoing pricing pressure. Hon Hai is a global provider of personal computer components and electronic manufacturing services for original equipment manufacturers. Despite facing a difficult market environment in the global high-tech industry, Hon Hai's sales jumped 67% year on year to about Taiwan dollar (NT$) 258 billion in fiscal 2002 (ended Dec. 31, 2002). Hon Hai's competitive advantages stem mainly from its low-cost position, quick cycle time,
