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Hon Hai Shares Fall Sharply After Factory Explosion

Business & GovernmentNews
by Michael Ide
, 23 May 2011News

Shares of Hon Hai Precision fell dramatically in the aftermath of the disastrous explosion at the company’s Chengdu factory that took three lives and left many injured.

Hon Hai Precision is one of Apple's key partners, specialising in manufacturing iPads and iPhones on behalf of the tech heavyweight. According to analysts, there is a fair possibility that these latest unfortunate developments at Hon Hai will eventually result in a negative impact on Apple’s tablet and smartphone supply chain.

According to reports, following the blast the company’s shares in Taipei trading dropped by almost 5.2 percent to NT$97.70, the lowest figure in the last few years.

“We expect Hon Hai’s original facilities in Shenzhen could quickly make up some of the shortfall from Chengdu by ramping up the idle capacity,” said Kirk Yang, an analyst at Barclays Capital in Hong Kong, Bloomberg reports.

“We would see any resulting price weakness as a sensible time to add to positions,” he added.

Apple made a statement promising to look into the explosion: “We are working closely with Foxconn at this point to understand what caused this terrible event. We are deeply saddened by the tragedy.” 

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