California: Apple’s main iPhone-making partner has indirect exposure to Silicon Valley Bank’s meltdown of about $100 million, joining the ranks of finance and tech firms shaken by the startup linchpin’s failure.
Taiwan’s Hon Hai Precision Industry Co. parked capital with investment funds that in turn funneled money into startups that banked with the California lender, Chairman Young Liu said. It’s now going through its books carefully but anticipates minimal impact since the Fed has guaranteed SVB’s deposits, he told reporters after reporting results Wednesday.
The Asian firm’s comment underscored how the spectacular implosion of a bank once little-known outside of Silicon Valley is exerting a far-reaching impact around the world. Hon Hai, also known as Foxconn, is the world’s largest manufacturer of iPhones and other electronics for brands from HP to Sony, maintaining the majority of its operations in China.
“The good news is that the US government has guaranteed full return of all deposits and I believe the damage will be minimized,” he said. “We don’t see systemic risks to our investments.”
SVB’s collapse over several frenzied days ignited confusion and panic among startups and financiers across the globe, and economists are still coming to terms with the implications and potential systemic risks that the episode exposed.