Hon Hai Triggers Pricing War on NB Connector Market

Taipei, Sept. 2, 2009 (CENS)--Hon Hai Precision Industry Co., Ltd., currently the world's No.1 contract electronics manufacturer, has begun launching a large-scale price cut of its connectors for notebook computers in hope of wining back contracts defecting to competitors after it added notebook assembly to business coverage last year.

Many notebook-computer makers have turned to other connector suppliers away from Hon Hai for the components although the company is among the world's top-five connector suppliers. Many of the computer makers have vowed that they would not buy the components from Hon Hai unless the company would undersell its products by at least 20%.

Some connector suppliers pointed out that Hon Hai has begun cutting prices of its connectors since beginning of this month.

Some notebook-computer makers said it does not make sense for them to continue refusing to accept Hon Hai's connectors once its pricing has become attractively low.

Industry watchers note that Hon Hai's connectors have been recognized unmatched from viewpoint of the company's quality, lead time, capacity, and service, making them convincingly acceptable.

Last year alone, connector contributed NT$10 billion (US$303 million at US$1:NT$33) to Hon Hai's NT$55.1 billion (US$1.6 billion) in earnings.

Although Hon Hai's underpricing move will undoubtedly erode business of some connector suppliers, some of them have pledged they would not compete on price with Hon Hai. Among them are Alltop Technology Co., Ltd. and ACES.