2015 Annual Report

HON HAI PRECISION INDUSTRY CO., LTD.

Annual Report

2015

Annual Report Website

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

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

Printing Date: April 30, 2016

THIS IS A TRANSLATION OF THE 2015 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: 6F, No. 6, Section 1, Chung Hsiao West Road, Taipei City

Tel: (02)2371-1658

Website: http://www.gfortune.com.tw

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

Name: Accountant 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

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

I. Letter to Shareholders

Over the past year, the global political and economic environment remained volatile and our global business operations faced numerous challenges. However, in the 43rd anniversary of the Hon Hai / Foxconn Technology Group, the efforts of our employees around the world contributed to our achieving new highs in consolidated revenue and profit in 2015. That result was the basis for our company being ranked 31 in the Global 500 by Fortune Magazine. As part of our efforts to continue this strong growth, our Group continues our research and development initiatives in a wide range of science and technology areas, complemented by a comprehensive patent strategy. According to IFI CLAIMS Patent Services, we were awarded 1,083 US patents in 2015 ranking us 29th in the world. In Taiwan, based on the 2015 Patent Application and Grant List published by the Intellectual Property Office of the Ministry of Economic Affairs, our Group had 659 new applications and we were granted 1,661 Taiwan patents in 2015 resulting in the thirteenth consecutive year we have been ranked first in patents granted in Taiwan. In this year of very strong results, we would like to thank all of our shareholders, customers, and suppliers for your full and seamless support of the Company.

The 2016 global economic environment remains uncertain, but, despite the daunting challenges we continue to invest in our successful "Step Forward," "Going Up," "Sell Outward" business strategy, in order to maintain growth momentum and create new opportunities for the next phase of our global expansion.

"Step Forward" represents a focus on design innovation, user experience, and technology development. "Going Up" refers to the integration of hardware and software, the combination of reality and virtualization, and cloud architecture. "Sell Outward" refers to the opening of markets, and the implementation of our e-Commerce and e-Business strategies.

In addition to the above, our group continues to maintain "Cloud, Mobile, the Internet of Things, Big Data, Smart Living, and Network + Robot" as key elements of our strategic direction. In the manufacturing segment, our goal is to push towards achievement of "Industry 4.0" (the fourth industrial revolution) and, with the help of big data analysis, to continue to leverage the advantages of precision manufacturing and sophisticated production efficiency, as well as to enhance the added value of the Production on Demand business model.

In the technology services segment, we continue to invest in the cloud and big data services, and we are actively moving into e-commerce. The Group's daily operations are centered around the "Three Virtuals," information flow, cash flow, and technology flow, and the "Three Realities," people flow, goods flow and process flow. Based on the big data generated by these six flows, we are moving closer to the smart society in which all things are connected by the internet.

The wide range of technology products and services associated with our Group are not only focused on obtaining big data, but also on performing further analyses and forecasts through the use of big data. Our Group's mission is to utilize the concept of the internet plus eight different living styles, to integrate "intelligent information" applications, allowing users to enjoy a better work experience, increased access to education and entertainment, an enhanced family and social life, better safety and health, better access to e-procurement and e-transactions and an improved environmental and transportation situation. These are all designed to ensure an improved quality of life and achievement of a more convenient and friendly society. By the time we achieve these goals, our Group will have been transformed into a big data-centric "Six Flows Enterprise."

In the meantime, we are actively promoting the continued internationalization of the group, as we also focus on the development and use of new technologies. As part of our ongoing emphasis on internationalization, we will continue to invest in the Greater China region, in addition to seeking investment and cooperation opportunities in key markets around the world including India. Our emphasis on the development of new technologies means that we will keep pursuing technical and scientific innovation. In addition to the continued investment of resources in R&D, our Group will also invest in new areas that are in line with our vision and complementary to our operations. We are also committed to supporting "Rejuvenation" and we do this by encouraging our employees to pursue creativity, innovation and entrepreneurship - as part of a "Three Creation Culture."

We would like to close this review by saying how honored we are to be able to expand our strategic alliance with the Sharp Corporation of Japan. The alliance is not only historically significant but will have tremendous synergies when our two world-class companies join forces. This is one way the Hon Hai/Foxconn Technology Group will capture the opportunities and face global competition and future challenges. As we do that we will continue to rely on the immense determination, perseverance and unity of everyone associated with our company to create long-term value for each and every shareholder.

Chairman Terry Gou

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