2014 Annual Report

HON HAI PRECISION INDUSTRY CO., LTD.

Annual Report

2014

Annual Report Website

Market Observation Post System: http://mops.twse.com.tw

Company Website: http://www.foxconn.com.tw

Printing Date: April 30, 2015

THIS IS A TRANSLATION OF THE 2014 ANNUAL REPORT (THE "ANNUAL REPORT") OF HON HAI PRECISION INDUSTRY CO., LTD. (THE "COMPANY"). THIS TRANSLATION IS INTENDED FOR REFERENCE ONLY AND NOTHING ELSE, THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE ANNUAL REPORT SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN.

I. Spokesperson: Deputy Spokesperson:

Name: Simon Hsing Name: Wenmin Chu

Title: Spokesperson Title: Director of Public Relations Office

Tel: (02)2268-3466#3629 Tel: (02)2268-3466#3869

E-mail: [email protected]

II. Contact information of the head office, branch offices and factories

Head office

Add: No. 66, Zhongshan Road, Tucheng Industrial Zone, Tucheng District, New Taipei City

Tel: (02)2268-3466

Hsinchu Science Park Branch Office

Add: 5F-1, No. 5, Hsin-an Road, Hsinchu Science and Industrial Park, East Area, Hsinchu City

Tel: (03)578-4975

Neihu Branch Office

Add: 1F-11F, No. 32, Jihu Road, Neihu District, Taipei City

Tel: (02)2799-6111

California (US) Branch Office

Add: 288 S. Mayo Ave City of Industry, CA 91789 U.S.A.

Tel: 1-714-680-2066

Huyue Factory

Add: No. 2, Zihyou Street, Tucheng Industrial Zone, Tucheng District, New Taipei City

Tel: (02)2268-3466

Minsheng Factory

Add: No. 4-1, Minsheng Road, Tucheng Industrial Zone, Tucheng District, New Taipei City.

Tel: (02)2267-6511

Dingpu No. 1 Factory

Add: No. 53, Section 4, Zhongyang Road, Tucheng District, New Taipei City

Tel: (02)2268-3466

Dingpu No. 2 Factory

Add: 2F, No. 53, Section 4, Zhongyang Road, Tucheng District, New Taipei City

Tel: (02)2268-3466

Dingpu No. 5 Factory

Add: 4F, No. 53, Section 4, Zhongyang Road, Tucheng District, New Taipei City

Tel: (02)2268-3466

Nankan Factory

Add: No 151, Section 1, Nankan Road, Luzhu Township, Taoyuan County

Tel: (03)270-0000

III. Share Transfer Agency

Name: Grand Fortune Securities Co., Ltd.

Address: 3F, No. 51, Section 1, Minsheng East Road, Taipei City

Tel: (02)2562-1658

Website: http://www.gfortune.com.tw 

IV. Contact information of the Certified Public Accountants for the Latest Financial Report

Name: Wu, Han-Chi and Chang, Ming-Hui

CPA Firm: Pricewaterhouse Coopers (PwC) Taiwan

Address: 27F, No. 333, Section 1, Keelong Road, Taipei City

Tel: (02)2729-6666

Website: http://www.pwc.tw 

V. Overseas trade places for listed negotiable securities

London Stock Exchange: http://www.londonstockexchange.com

Singapore Stock Exchange: http://www.sgx.com/wps/portal/marketplace/mp-ch/home

VI. Company Website: http://www.foxconn.com

I. Letter to Shareholders

Over the past year, the global political and economic situation has been very dynamic, while technology industries continue to be shuffled and ranked up and down. Hon Hai in such a tough environment can still pay out bright operating results. We would like to thank all our shareholders, customers, and suppliers for their full and seamless support of the Company.

In reviewing 2014, the global economic environment presented a slow recovery and our individual region is showing differentiated development. According to the survey conducted by International Monetary Fund (IMF), the global economy grew slightly by 3.3% in 2014 and only the U.S. recovery trend was significant. The Eurozone faced debt and unemployment problems, Japan was affected by the consumer tax hike, high public debt and other issues, and the economic growth rate of China and other emerging markets slowed down compared to past years. In the meantime, the technology industry is undergoing a structural, technical, and business model change, global competition breaks the national borders, and the traditional definitions of the boundaries of hardware and software have become more indistinct. Faced with accelerating changes in the industrial environment, our Company is not only continuing to strengthen research and development, but also expecting to remain competitive and create higher added value in the ecosystem war through acquisitions or strategic alliances for hardware and software. In such a highly competitive environment, our Company is still in a stable development stage and continues to be recognized externally, being ranked 32nd last year according to the U.S. Fortune "Global 500" ranking report. We have continued to strengthen our technical development, obtaining 1,537 U.S. patents in 2014, ranked 18th highest in the world.

Looking into the new year, according to the IMF survey, the growth of the world's major economies is slowing down, though the U.S. economy will continue to be strong. The global environment is still full of uncertainties, including the possibility that the U.S. Federal Reserve may raise interest rates, the Eurozone deflation haze, low oil prices and other circumstances, will make this year even more challenging. In the meantime, the digital convergence powered by 4G telecommunication technologies is rapidly flipping the entire industry outlook; the maturation of sensing, computing, transmission and storage technologies is promoting the overall development of the Internet of Things, allowing Big Data and its analysis to be made more efficiently, thus leading to intelligent life as the core of the new era of the "Internet +," which will also lead to more business model innovations through rich internet-connection thinking. In addition to the more humanized technological developments, the market will be more segmented and the value of "services" will play a more important role in the competition and be the key to victory in the increasingly intense war of ecosystems.

Our Company has recruited and kept the top talent from a variety of backgrounds over the past years. We have built core competencies in the fields of information and communication technology, precision machinery, optoelectronics, materials, automation equipment, software, e-commerce, etc. and to build up an "Integration, Innovation, Design, Manufacture - Sales, Marketing" (IIDM-SM) technology manufacturing and services platform. The Hon Hai Group will continue to break free from the traditional framework of innovative thinking and move forward to technology services and e-commerce transformation. In this way, we will be able to form a more comprehensive link to end-user markets, and utilize Internet of Things technology for generating Big Data to understand and forecast end-users' demands, to improve the production process in order to achieve the "Industry 4.0" Smart Manufacturing Paradigm. Faced with the rapid changes of the industrial environment and the world moving towards an aging population, the focus of the Hon Hai Group's future development and core concepts will cover "Cloud Computing", "Mobile Devices", "Internet of Things (IoT)", "Big Data", "Smart Lives", and "Networks", and utilize "Smart Robots" to help improve quality of life and to promote human welfare. We believe these major areas will be an inevitable future. We will continue to strengthen our expertise and create greater values for our shareholders.

As always, on behalf of all shareholders, I sincerely thank all the employees and their families. I also encourage the Company's management team uphold the highest levels of creativity and innovation, continuing to move forward with the entrepreneurial spirit. I would like to thank you all again for all of your support.

Chairman Terry Guo

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