Hon Hai targets Indonesia to diversify Apple-heavy revenue

Reuters News
Posted: Apr 25, 2013 11:40 PM
Hon Hai targets Indonesia to diversify Apple-heavy revenue

TAIPEI (Reuters) - Hon Hai Precision Industry, the world's largest electronics contract maker, said it hopes to sign an agreement with Indonesia next month to make and sell handsets in the Southeast Asian country's huge domestic market.

The Taiwanese company, which makes about 60 to 70 percent of its revenue assembling iPhones and iPads and other work for Apple Inc, has been trying to diversify its business and client base as the U.S. tech giant's growth momentum slows.

Hon Hai is in talks with a few Indonesian phone companies, spokesman Simon Hsing told Reuters on Friday, and they will decide the form of investment and sign partnership agreements after a memorandum of understanding (MOU) with the government is secured.

Hon Hai has no plan to export phones from Indonesia and will not make Apple products there, Hsing said, confirming for the first time that the company has decided to invest in Indonesia. It would only manufacture phones for local brands and sell them in Indonesia.

"We're going there for the market -- it's a $2.4 billion phone market in Indonesia," he added.

The flagship company in the Foxconn Technology Group posted a 19 percent decline in sales in the first quarter compared with a year earlier, hurt by disappointing demand for the iPhone.

Hon Hai did not disclose the amount of potential investment, but Indonesian Trade Minister Gita Wirjawan suggested a figure of between $5 billion and $10 billion in August last year. He said Hon Hai planned to build a plant in an industrial zone near Jakarta to assemble 3 million handsets a year.

Commercial Times reported on Friday that Hon Hai and Indonesia would sign a MOU as early as May. It cited Wirjawan as saying Hon Hai would start producing handsets in the country this year.

(Reporting by Clare Jim; Editing by Stephen Coates)