The rating on Hon Hai Precision Industry Co. Ltd. reflects the company's strong competitive position in the global electronics manufacturing services (EMS) industry, low cost and unrivalled vertically integrated production model, and modest debt usage. The company's increasing business risks associated with the global contract EMS industry and continuing margin pressures partly constrain the rating. We believe Hon Hai's position as the world's largest EMS provider strongly supports the rating. The company has established a strong customer base with major global players in a wide range of electronics products, which partly offsets the risk of customer concentration. Hon Hai's 44% year-on-year revenue growth in the first quarter of 2010 is strong, in our view, and attributable to strong recovery in
