Hon Hai Garners HP`s Contract Order for Printers

Taiwan-based Hon Hai Precision Industry Co Ltd, a globally leading EMS (electronics manufacturing service) provider, has reportedly landed HP`s contract orders for printers this year, which will significantly help boost the firm`s shipments of notebook PCs and printers, according to industry sources.

Over the past years, HP has worked closely with its Taiwanese contract suppliers, Lite-On Group and Cal-Comp Electronics and Communications Co, on production of printers, which has created high margins for the two suppliers.

However, with HP moving to cut costs to counter the global financial tsunami, Hon Hai, backed by strong production capability and economy of scale in capacity, has outbid the two Taiwanese counterparts, successfully snapping up HP`s contract orders. Hon Hai is expected to take a leading position among global major printer suppliers as a result.

In fact, the cooperation between HP and Hon Hai is getting close, as HP has already decided to contract Hon Hai, instead of its original supplier Pegatron Corp, as its production arm of PCs in China. Furthermore, the two firms have also jointly set up a PC production plant in Turkey to explore that market.

Noteworthy is that HP`s decision to switch contract orders to Hon Hai will even cause a steep decline of 80 percent in Cal-Comp`s printer shipments, which contribute around 30 percent to the supplier`s annual revenue, industry insiders noted.

In addition to printers, Hon Hai has recently won a new contract order from Apple for notebook PCs. Plus, the firm has also cooperated with IBM on distributing GreenCert application software, and will set up an electronics retail store, Media Market, in Shanghai, China, next year, showing its ambition to focus on service provision.

Source: CENS